Share on Facebook
Share on Twitter
Share on LinkedIn

This post is Part II in a series about new and revised laws passed by the Virginia General Assembly in their 2020 session that affect trust and estates and guardianships and conservatorships. Unless otherwise noted, each of these new laws come into effect on July 1, 2020.

Senate Bills 261 and 308, which have been incorporated into Virginia Code §§ 64.2-1305 and 64.2–2020, adds a twist to the preexisting fiduciary accounting and reporting requirements for all guardians, conservators, testamentary trustees, guardians of minor’s estates, committees, and receivers. Historically, each of these positions has been required to file an annual accounting of assets with the Commissioner of Accounts detailing all income and expenses, or, in the case of a guardian, an annual report with the local department of social services regarding the incapacitated person’s continuing condition. These annual reports provide a means for the Court and outside parties to keep an eye on fiduciaries to make sure they are continuing to act in the best interests of the person they have been appointed to care for.

The new bill adds the requirement that not only must the accounting and report be made under oath, but that the fiduciary is subject to a civil penalty of up to $500 for making a false statement – a strong incentive, if any were necessary, to be accurate. That said, it is unclear what the actual effect of this new provision will be. Fiduciaries are already subject to strong penalties, up to and including removal from their appointed position and personal liability for court proceedings, if they fail to properly perform their duties. A $500 fine is relatively small in comparison, and except in extreme cases, it seems unlikely that the Commonwealth will bother with prosecution.

It should also be noted that the original versions of the bill as submitted mandated that such perjury should be classified as a Class 1 misdemeanor or Class 5 penalty, both of which would carry jail time. Colleagues have unofficially told me that this suggestion – which was recommended by the Virginia Criminal Justice Conference – was lobbied against by various Virginia trust and estate attorneys, and the final result is clearly due to their efforts.

Finally, it should be noted that this particular change does not currently apply to executors and administrators of estates, who are also required to file annual accountings for as long as the estate remains open. I can only assume that they were not included because decedent’s estates are generally closed much more quickly than, for example, estates under a conservatorship or trust, but perhaps the law will be amended to include them in future. In the meanwhile, guardians and conservators should be aware of the consequences for making false statements in future reports and accountings.