Security for Certain Out-of-State Banks and Trust Companies Serving in Virginia

November 8, 2010

A recent reorganization of the Virginia Code confirms that out-of-state banks or trust companies will not be treated differently than in-state institutions with respect to a statutory exemption from providing security on their bond when serving as executor or trustee in Virginia.

Former Virginia Code section 6.1-18 provided that bank or trust companies “of this Commonwealth” with unimpaired capital stock of at least $50,000 would not be required to give security upon appointment as executor or trustee in Virginia, provided the value of the estate did not exceed the value of the institution’s unimpaired capital and surplus.

Effective Oct. 1, 2010, Virginia Code Title 6.1 (Banking and Finance) was recodified into a new Title 6.2 (Financial Institutions and Services). As part of that recodification, Virginia Code section 6.1-18 was repealed and replaced by new Virginia Code section 6.2-1003. New section 6.2-1003 eliminates the words “of this Commonwealth” from the exemption, thereby broadening the exemption to apply to all banks and trust companies that meet the other conditions of the statute.

This change to the statutory language is consistent with a recent opinion of the Virginia Attorney General. In 2003, the Virginia Attorney General issued Opinion 03-122 which provides that § 92A of the National Banking Act preempts Virginia law to the extent that Virginia law prohibits a national bank supervised and regulated by the Comptroller of the Currency from serving as executor, administrator, or trustee in Virginia. Under this opinion, a national bank may serve as a fiduciary in Virginia even without a physical presence in the Commonwealth. The change to section 6.1-18 was likely viewed as a technical change because of its consistency with this Virginia Attorney General Opinion.

New Virginia Code section 6.2-1003 clarifies that out-of-state banks and trust companies are on even footing with in-state institutions as to this exemption from the requirement of security when serving as a fiduciary in Virginia.

McGuireWoods Fiduciary Advisory Services

Fiduciary Advisory Services advises financial institutions and other clients about planning, tax, and fiduciary matters. This includes advising executors and trustees in managing risks, avoiding litigation, and handling litigation when it does arise.

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