Alexandria, VA Estate Planning Blog

Wednesday, July 2, 2014

Trust Document: Certificate of Trust

What does a Certificate of Trust do?
A certificate of trust is a basic ancillary trust document designed to protect the privacy of the trust and its terms.

Why use a Certificate of Trust?
By using a certificate of trust, you may be able to keep the trust more private. In addition, you may be able to pass liability on to a party requesting trust information.

When should you use a Certificate of Trust?
If a bank, financial advisor, or other person requests a copy of the trust instrument, you should consider offering them a certificate of trust in lieu of providing them any copies of the trust pages.

What happens if the Certificate of Trust isn’t enough?
If a person dealing with a trustee refuses to accept a duly executed certificate of trust, that person may have exposed themselves to liability for any losses that result if their demand for further trust instrument wasn’t made in good faith.

How does a Certificate of Trust work?
Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may be able to furnish to said person a certification of trust containing the following trust information:

1. That the trust exists and the date the trust instrument was executed;
2. The identity of the settlor;
3. The identity and address of the currently acting trustee;
4. The powers of the trustee;
5. The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust;
6. The authority of cotrustees to sign or otherwise authenticate and whether all or less than all are required in order to exercise powers of the trustee;
7. The trust's taxpayer identification number; and

The manner of taking title to trust property.
A certification of trust may be signed or otherwise authenticated by any trustee.

A certification of trust shall state that the trust has not been revoked, modified, or amended in any manner that would cause the representations contained in the certification of trust to be incorrect.

A certification of trust need not contain the dispositive terms of a trust.

A recipient of a certification of trust may require the trustee to furnish copies of those excerpts from the original trust instrument and later amendments that designate the trustee and confer upon the trustee the power to act in the pending transaction.

A person who acts in reliance upon a certification of trust without knowledge that the representations contained therein are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification.

A person who in good faith enters into a transaction in reliance upon a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct.

A person making a demand for the trust instrument in addition to a certification of trust or excerpts is liable for damages if the court determines that the person did not act in good faith in demanding the trust instrument.

A person may still be able to obtain a copy of the trust instrument in a judicial proceeding concerning the trust.

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