Trustee compensation under Virginia law: reasonable, and on the record

The terms, else reasonable compensation

Va. Code § 64.2-761 provides that if the terms of a trust do not specify the trustee's compensation, the trustee is entitled to compensation that is reasonable under the circumstances; if they do, the trustee is entitled to the compensation specified, but the court may allow more or less where the trustee's duties are substantially different from those contemplated when the trust was created, or the specified compensation would be unreasonably low or high. The court's power to adjust compensation is one the terms cannot remove (Va. Code § 64.2-703).

Notice, the report and reimbursement

The trustee notifies the qualified beneficiaries in advance of any change in the method or rate of compensation (Va. Code § 64.2-775(B)(4)), and the annual report states the source and amount of the compensation (Va. Code § 64.2-775(C)). A trustee is reimbursed out of the trust property, with interest as appropriate, for expenses properly incurred, and an advance for the trust's protection carries a lien for repayment (Va. Code § 64.2-762).

Before the Commissioner of Accounts

For a fiduciary who accounts to the Commissioner of Accounts, the commissioner allows reasonable expenses and a reasonable compensation, in the form of a commission on receipts or otherwise; where the instrument sets an institutional fiduciary's fee by its published schedule, the commissioner does not reduce it without sufficient proof (Va. Code § 64.2-1208). A fiduciary who wholly fails to file an account within four months after the year's end receives no compensation for that year unless the commissioner allows it for good cause (Va. Code § 64.2-1217).

Paying yourself is a conflict the statute permits

Payment of reasonable compensation to the trustee is not precluded by the duty of loyalty (Va. Code § 64.2-764), but it is the trustee's own transaction, and the record is what shows the terms or the statute's standard was met. What is reasonable for a given trust, and whether the instrument's provision fits the work actually done, are questions for a licensed Virginia attorney of your choosing.

The statutes, verbatim

• Expenses and commissions allowed fiduciaries

  Va. Code § 64.2-1208 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Forfeiture of fiduciary's commission

  Va. Code § 64.2-1217 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Compensation of trustee

  Va. Code § 64.2-761 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Reimbursement of expenses

  Va. Code § 64.2-762 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

Common questions

Frequently asked questions

How much can a Virginia trustee be paid?

What the terms specify or, if they are silent, compensation reasonable under the circumstances; the court may allow more or less (Va. Code § 64.2-761).

Must a Virginia trustee give notice before changing the fee?

Yes, advance notice to the qualified beneficiaries of any change in the method or rate (Va. Code § 64.2-775(B)(4)).

Can a Virginia trustee lose compensation?

A fiduciary who files no account with the Commissioner of Accounts within four months after the year ends forfeits that year's compensation unless the commissioner allows it (Va. Code § 64.2-1217); the court may also reduce or deny compensation for a breach of trust (Va. Code § 64.2-792).

General information about Virginia law, not legal advice.