As trustee of a trust, you will often have to deal with third parties, such as banks or title companies. As the creator of the trust, this occurs when you need to transfer and re-title your assets. As a successor trustee, this happens when you need to gain access to trust assets. The third party will require some sort of proof of the trustee's authority. Sometimes they will require a copy of the trust, or even the original trust document.
However, most people do not want to provide the entire trust. The trust document often contains private information, such as the names of the beneficiaries and what they are going to receive (the dispositive provisions). In fact, privacy is one of the many reasons for setting up a trust in the first place.
This is where a certification of trust comes in. California law authorizes the use of this document to show the trustee's authority, in lieu of the complete trust. This document may contain the following, in order to provide the required evidence to the third party:
- The existence of the trust and its date of execution
- The names of the settlors and trustees
- The trustee's powers
- Whether the trust is revocable and who can revoke it
- The signing authority when multiple trustees are involved (i.e., how many trustees are required to sign for trust matters)
- The social security number or employer identification number for the trust
- How title to assets is to be taken
- A legal description of real property
- Excerpts from the trust related to successor trustees
- If real property is involved, it may be recorded in the county where the property is located
These are the statutory requirements for the certification of trust to be valid:
- It must include a statement “that the trust has not been revoked, modified, or amended in any manner which would cause the representations contained in the certification of trust to be incorrect”
- The certification must also include a statement that it is “being signed by all of the currently acting trustees of the trust”
- All currently acting trustees must sign and the signatures must be acknowledged by a notary
A certification of trust is not required to contain the dispositive provisions.
Often times, banks and other institutions have requirements that make it difficult for trustees to carry out their duties. These rules are designed to ensure that only the right people have access to trust property. The certification of trust helps maintain the privacy of the trust, while also keeping trust assets protected.
If a third party refuses to accept the certification of trust, they can be liable for damages and attorneys' fees if they acted in bad faith. However, the law provides certain protections to third parties from liability if they rely on the certification in good faith.
You may execute this document upon request, but it is better to have it already executed as part of your estate plan, in case you need it.
Helix Law Firm can help with estate planning
If you would like to provide for your loved ones and control the disposition of your assets when you're gone, we can help. We can draft an estate plan that fits your needs and help take the burden of this task off your shoulders.
If you're interested in learning more about how Helix can help, please call us at (619) 567-4447 to schedule a free consultation.