How Does a Trust Work In Virginia?

At their core, trusts are about control, continuity, and safety. They allow you to choose who manages your assets, when those assets are used, and who receives them, all while bypassing probate court (and potentially avoiding creditors and lawsuits, depending on your type of trust)

In Virginia, trusts are governed by the Virginia Uniform Trust Code, which sets rules for their creation, administration, and enforcement.

When a trust is created, ownership of certain assets is legally transferred into the trust. Those assets are then managed according to the instructions written into the trust document.

Unlike a will (which only takes effect after death) a trust can operate during your lifetime, during incapacity, and after death.

The First Thing You Should Know: The Types of Trusts

There are many types of trusts used in Virginia, all with different purposes depending on your goals, family situation, and how much control (or protection) you need.

Revocable Living Trusts

This is the most popular type of trust, mostly because of its flexibility. It works by transferring ownership of your assets (such as your home, bank accounts, or investments) into the trust while you’re alive. During your lifetime you serve as your own trustee, which means you can control or use anything within the trust as you do already. You can buy property, sell it, refinance it, or use anything within the trust during your lifetime. You can also change beneficiaries or successor trustees at any time, as well as change or revoke the trust. 

If you fall ill or get into a life-changing accident, your successor trustee that you named can step in immediately on your behalf to manage bills, property, and finances without having to go through the court or get it involved. When you pass away, the trust continues to operate without probate required. It simply follows your instructions written within it and distributes assets to beneficiaries according to your instructions. 

Irrevocable Trusts

An irrevocable trust works by permanently transferring assets out of your personal ownership and into the trust. Once you place your assets into it, it legally belongs to the trust, meaning you cannot take them back or change the terms without legal approval. 

The assets legally not belonging to you gives you a huge boost. Your assets in the trust will ward off any creditors, lawsuits, or estate taxes (as well as of course, bypassing probate entirely). Irrevocable trusts are sometimes used in long-term care or Medicaid planning because assets placed into the trust are no longer considered yours for Medicaid eligibility purposes. However, Medicaid has a five-year “look-back” period in Virginia. If assets are transferred into an irrevocable trust within five years of applying for Medicaid, Medicaid can impose a penalty period where benefits are delayed.

Structure matters just as much as timing. If the trust allows you too much control or access to the assets, Medicaid may still count them as yours, which defeats the purpose. If it’s structured correctly with an attorney and funded early enough, the trust can help preserve assets for your family while still allowing you to qualify for benefits when long-term care is needed.

Irrevocable trusts are one of the most powerful estate planning tools when created properly, so we recommend creating one with an attorney to get it right the first time. 

Testamentary Trusts

Unlike most trusts (like revocable or irrevocable trusts), a testamentary trust does not exist while you’re alive. It only comes into existence after your death, once your will goes through probate and the court authorizes the trust to be created.

Living trusts are designed to avoid probate entirely. A testamentary trust is the opposite—it depends on probate. Assets must first pass through the court before they can be placed into the trust.

Testamentary trusts are less about asset protection or tax planning and more about control after inheritance. They allow you to:

• Delay distributions until beneficiaries reach certain ages
• Control how money is used (education, housing, support)
• Provide oversight when beneficiaries are minors or financially inexperienced

A testamentary trust doesn’t replace other trusts—it fills a very specific role. It’s useful when the main concern is how beneficiaries receive assets, not avoiding probate or protecting assets during life.

The Three Key Roles Within a Virginia Trust

Every trust, no matter how simple or complex, involves three main roles.

The Grantor (or Settlor)

The grantor is the person who creates the trust and transfers assets into it. This person decides:

• What assets go into the trust
• Who benefits from the trust
• How and when assets are distributed
• Who manages the trust

In many Virginia trusts, the grantor also serves as the trustee while alive.

The Trustee

The trustee is responsible for managing the trust assets and following the trust’s instructions. Trustees have a legal duty (called a fiduciary duty) to act in the best interests of the beneficiaries.

In Virginia, trustees must:

• Follow the trust’s terms exactly
• Act carefully with investments and distributions
• Keep records and provide accountings when required

A trustee can be someone personal to you, such as a family member, a professional, or a corporate trustee.

The Beneficiary

Beneficiaries are the people (or organizations) who benefit from the trust. They may receive:

• Income from the trust 
• Use of trust property 
• Lump-sum or staged distributions 

Trusts can name multiple beneficiaries and can control when and how each beneficiary receives assets.

How Trusts Are Created in Virginia

To create a valid trust in Virginia, several requirements must be met:

• The grantor must have legal capacity (being aware of what they’re doing and being a legal adult)
• The trust must have a clear purpose written
• The trust must name identifiable beneficiaries
• The trust must be properly signed and executed

Most trusts are created as written documents. While Virginia law allows for oral trusts in rare situations, written trusts are the standard and safest approach.

Once the trust document is signed, it still does nothing until it is funded. Funding is arguably the most important part.

What It Means to “Fund” a Trust

Funding a trust means transferring ownership of assets into the trust’s name.

This is one of the most misunderstood steps in the process. Creating the trust document alone does not move assets automatically.
Here’s how you can fund your trust:

Real estate

You retitle your home or other property from your personal name into the name of the trust by signing and recording a new deed.

Bank accounts
Checking and savings accounts are either retitled into the trust or set up so the trust is the owner. This usually involves paperwork with the bank.

Investment accounts
Brokerage accounts can be moved into the trust, or in some cases, left in your name with the trust listed as the beneficiary—depending on the type of account and your goals.

Personal property
Items like furniture, jewelry, artwork, or collectibles are often transferred using a simple assignment document that places them under the trust.

Business interests
LLC memberships, shares, or partnership interests can be reassigned to the trust with proper documentation.

Beneficiary designations
Some assets (like retirement accounts) can’t be retitled, so you “fund” them by naming the trust—or specific people—as beneficiaries in a way that matches the trust’s instructions.

Why this matters
If assets stay in your personal name, the trust can’t control them. That’s when families end up in probate, dealing with frozen accounts, delays, or court involvement—despite having a trust on paper.

How Trusts Avoid Probate in Virginia

One of the most common reasons people use trusts is to avoid probate.

In Virginia, probate is the court-supervised process of validating a will and distributing assets. It can involve:

• Court filings
• Public records (anyone can access private information)
• Delays in asset distribution (typically for 6 months or 12 months)
• Administrative costs that drain asset value

Assets owned by a trust are not owned by the individual at death—they are owned by the trust. Because of this, they typically pass directly to beneficiaries without going through probate court.

We hope this article was of use to you. If you have further questions or would like to create a trust, feel free to contact Legacy Law today!