Virginia Trust Administration Guide

If you have been named the successor trustee of a Virginia revocable living trust, this guide explains what to do after the person who created the trust (the settlor) dies. Your job is to step in, gather the trust's assets, pay valid debts and taxes, keep the beneficiaries informed, and then distribute what is left under the trust's terms. Most of this work happens outside of court, which is one reason families set up a Virginia revocable living trust in the first place.

Virginia trusts run under the Virginia Uniform Trust Code, found in the Code of Virginia, Title 64.2, Chapter 7. That chapter sets out a trustee's duties, the notice you owe to beneficiaries, and how you account for what you did. This guide walks through the process in plain terms and points to the exact statute sections so you can read the law yourself.

The Successor Trustee's Job at a Glance

Here is the basic sequence most Virginia trust administrations follow:

1. Accept the trusteeship and read the full trust document plus any amendments.
2. Order certified death certificates and secure the trust's property.
3. Get a tax ID number for the trust and open a trust bank account.
4. Send the required written notice to the qualified beneficiaries within 60 days.
5. Identify, gather, and value all trust assets.
6. Pay valid debts, final bills, and taxes.
7. Keep beneficiaries reasonably informed and provide a report.
8. Distribute the remaining assets under the trust terms and close the trust.

Each step below explains what the law expects and where probate may still come into play.

Step 1: Accept the Trusteeship

When the settlor dies, the revocable trust becomes irrevocable, and you move from being a named backup to the acting trustee. Under Va. Code 64.2-754, you accept the role either by following the method written in the trust, or by accepting delivery of the trust property, using your powers, or otherwise acting as trustee.

You do not have to take the job. The same section lets a named trustee who has not yet accepted decline the role. If you are not sure you want to serve, do not start managing assets before you decide, because acting as trustee can count as acceptance. You may take steps to preserve property while you decide, as long as you send a rejection within a reasonable time if you choose to step aside.

If you do accept, read the entire trust document carefully. Note who the beneficiaries are, what each one receives, any conditions on distributions, whether the trust pays you for your work, and who serves after you.

Step 2: Secure Property and Get Organized

Move quickly to protect the trust's assets:

• Order at least 10 to 15 certified death certificates. Banks, title companies, and transfer agents each want their own copy.
• Secure the home, vehicles, valuables, and important papers. Change locks if the settlor lived alone.
• Keep insurance on real estate and vehicles in force so a lapse does not expose the trust to loss.
• Redirect mail so you can find bills, account statements, and tax notices.

Get a Trust Tax ID and Bank Account

While the settlor was alive, a revocable trust usually used the settlor's Social Security number. After death, the trust needs its own Employer Identification Number (EIN). Apply free through the IRS. Then open a checking account in the trust's name using that EIN, and run every trust payment through it. Keeping trust money separate from your own money creates a clean record and protects you later.

Step 3: Notify the Qualified Beneficiaries

This is the step Virginia law spells out most clearly, and the one new trustees most often miss. Under Va. Code 64.2-775, the duty to inform and report, you must do the following:

• Within 60 days after accepting the trusteeship, notify the qualified beneficiaries that you accepted, and give them your name, address, and telephone number.
• Within 60 days after you learn the trust has become irrevocable, which happens at the settlor's death, notify the qualified beneficiaries of the trust's existence, the settlor's identity, their right to request a copy of the trust instrument, and their right to a trustee's report.
• Promptly respond to a beneficiary's reasonable request for information about the administration, unless responding would be unreasonable under the circumstances.
• On request, give a beneficiary a copy of the trust instrument.
• Notify the qualified beneficiaries in advance of any change in the method or rate of your compensation.

A "qualified beneficiary" is, in short, a beneficiary who currently receives or could receive distributions, or who would take if the trust ended now. Send these notices in writing and keep a dated copy of each one. That file is one of your best protections if a beneficiary later questions how you handled things.

Send the notices even when the beneficiaries are close family who already know the settlor died. The statute sets the requirement, and a written notice avoids later arguments about what you told people and when.

Step 4: Gather and Value the Trust Assets

Under Va. Code 64.2-771, you must take reasonable steps to take control of and protect the trust property. Under Va. Code 64.2-774, you must take reasonable steps to collect trust property and, if a prior trustee mishandled assets, to set that right.

Build a full inventory of everything the trust owns:

• Real estate, with a date-of-death appraisal for each parcel
• Bank accounts and certificates of deposit
• Investment and brokerage accounts
• Retirement accounts or life insurance that name the trust as beneficiary
• Business interests
• Vehicles, jewelry, collectibles, and other personal property

Value each asset as of the date of death. Get professional appraisals for real estate, business interests, and high-value items. Accurate date-of-death values matter for taxes and for splitting assets fairly among beneficiaries.

Watch for Assets the Trust Does Not Own

A trust only controls what was actually retitled into it. If the settlor signed a will but forgot to move an account or a deed into the trust, that asset may still need probate in Virginia. Many people pair their trust with a pour-over will that directs leftover assets into the trust, but those assets usually pass through probate before they reach you. Virginia also offers a small estate affidavit for a personal-property probate estate of $75,000 or less, available 60 days after death, under Va. Code 64.2-601. Confirm the current threshold and which assets count with the Clerk of the Circuit Court or an attorney.

Step 5: Manage Assets Prudently

While you administer the trust, you have a duty to manage its assets with care. Under Va. Code 64.2-766, you must administer the trust as a prudent person would, using reasonable care, skill, and caution. If the trust holds investments, Va. Code 64.2-781, the prudent investor rule, sets the standard for how you invest and manage them.

You also owe a duty of loyalty under Va. Code 64.2-764. You must administer the trust solely in the interests of the beneficiaries, not for your own gain. Self-dealing, such as buying trust property for yourself at a bargain, can be undone by an affected beneficiary. When in doubt, avoid any transaction that mixes your personal interest with the trust's.

You do not need to be a financial expert. You do need to act sensibly, keep records, and get professional help for anything complex.

Step 6: Pay Debts, Final Bills, and Taxes

Before any beneficiary receives a distribution, settle what the trust owes:

• Final medical bills, utilities, and other valid debts
• The settlor's final personal income tax return (Form 1040) for the year of death
• A fiduciary income tax return (federal Form 1041) if the trust earns enough income after death, plus the matching Virginia fiduciary return
• Any federal estate tax, which applies only to very large estates

Virginia has no separate state estate tax or inheritance tax. The state probate tax, charged when a will is probated, runs about $1 per $1,000 of value under Va. Code 58.1-1712, and it applies to probate assets rather than trust assets. A trust-held estate often skips that tax because the assets pass outside probate.

Do not rush distributions. If you pay out the trust and then discover an unpaid debt or tax, you can be left personally responsible for the shortfall. Hold a reasonable reserve until you are confident all debts and taxes are covered. A CPA who handles trust returns is worth the cost on anything but the simplest estate.

Step 7: Keep Beneficiaries Informed and Account

The duty to inform does not end with the first notice. Under Va. Code 64.2-775, you must keep the qualified beneficiaries reasonably informed about the administration and send a report at least annually and when the trust ends. The report lists the trust property and liabilities, the receipts and disbursements, your compensation and how it was figured, and a list of the trust assets with their market values when feasible.

Practical habits that keep you out of trouble:

• Send a written report to beneficiaries on a regular schedule, not just at the end.
• Keep every receipt, statement, and appraisal in an organized file.
• Answer reasonable questions promptly and in writing.
• Get a signed receipt from each beneficiary when you hand over a distribution.

What You Can Be Paid

Under Va. Code 64.2-761, a trustee is entitled to reasonable compensation when the trust does not set a fee. If the trust does set your fee, you are paid as stated, though a court can adjust it if your duties differ greatly from what was expected or the stated amount is unreasonably high or low. Many family trustees waive a fee to leave more for the beneficiaries. If you do take a fee, disclose it in your report.

Step 8: Distribute and Close the Trust

Once debts and taxes are handled and the reserve is no longer needed, distribute the remaining assets:

• Make specific gifts first, the items or dollar amounts left to named people.
• Distribute the residue, what is left after specific gifts and expenses, to the residuary beneficiaries.
• Keep any sub-trusts running if the document creates them, such as a trust for a minor or a beneficiary who should not receive a lump sum.

To move real estate to a beneficiary, sign and record a trustee's deed with the circuit court clerk's office in the city or county where the land sits. Get a signed receipt for every distribution. After the final report goes out and the last asset is distributed, the trust is settled.

How This Fits Into Your Estate Plan

Trust administration is one piece of a larger plan, and it works best when the other pieces are in place. A Virginia revocable living trust holds and passes assets without probate, but it does not cover health care or out-of-trust property by itself. A Virginia financial power of attorney handles assets the trust does not hold and acts a trustee cannot take. A valid Virginia will, often a pour-over will, catches anything left out of the trust.

If you are deciding between these tools rather than administering an existing trust, the national will vs. trust comparison lays out the trade-offs. And if some assets were never moved into the trust, the Virginia probate guide explains the court process those assets may still need.

The Bottom Line

As a Virginia successor trustee, your core duties come straight from the Virginia Uniform Trust Code: accept the role, take control of the property, send the qualified beneficiaries written notice within 60 days under Va. Code 64.2-775, manage assets prudently, pay debts and taxes, keep beneficiaries informed with a report, and distribute what remains under the trust terms. Move carefully, document everything, and pay debts before you pay beneficiaries. For real estate transfers, tax filings, or any dispute, a Virginia trust attorney can keep a clean process from going sideways.

Official Sources

• Title: Va. Code 64.2-754, Accepting or declining trusteeship. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-754/
• Title: Va. Code 64.2-761, Compensation of trustee. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-761/
• Title: Va. Code 64.2-764, Duty of loyalty. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-764/
• Title: Va. Code 64.2-766, Prudent administration. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-766/
• Title: Va. Code 64.2-771, Control and protection of trust property. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-771/
• Title: Va. Code 64.2-774, Collecting trust property. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-774/
• Title: Va. Code 64.2-775, Duty to inform and report. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-775/
• Title: Va. Code 64.2-781, Prudent investor rule. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter7/section64.2-781/
• Title: Va. Code 64.2-601, Payment or delivery of small asset by affidavit. Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title64.2/chapter6/section64.2-601/
• Title: Va. Code 58.1-1712, Probate tax (state probate tax rate, about $1 per $1,000). Publisher: Code of Virginia (Virginia Law). URL: https://law.lis.virginia.gov/vacode/title58.1/chapter17/section58.1-1712/

Sources

This guide is general information, not legal advice. Consult a qualified attorney about your situation. It is not legal advice.