The Certification of Trust (“Certificate”) serves multiple purposes.
First, it is a synopsis of the main terms of the Trust. Once a Trust is established, it must be “funded”. Assets that typically get transferred into the ownership of the Trust are Real Property, Bank Accounts, and Regular Brokerages.
The Settlor (Individual establishing the Trust) then presents the Certificate to the Financial Institution. Likely he or she will be asked for the Certificate.
Usually it is a good idea to bring the “original wet ink” signed and notarized Certificate due to chain of custody concerns. If you bring a homemade Copy, the Financial Institution may reject it, and ask for an “Attorney Certified Copy of the Certificate”.
The Financial Institution wants the Certificate because it wants the “Synopsis”, or main terms and summary v. the forty page Revocable Trust document for which it lacks legal resources.
A second purpose involves Real Property. If Real Property is transferred into the ownership of the Trust, the Certificate will indicate the same. The Certificate can be recorded with the County Recorder. If not recorded, it will need to be presented to the Title Company upon sale of the Real Property.
The Law Offices of Hanlen J. Chang provides a Certification of Trust with each Revocable Trust package.
As an Estate Planner I often answer questions about the Mechanics of Trust Funding:
Some important concepts include:
- Only Assets owned by or related to the Trust are controlled by the Trust Terms;
- Common Trust funding Assets include: Real Estate, Bank Accounts, Brokerages, Business Shares, Intellectual Property, and Personal Items;
- Common Assets to Relate to Trust include: Retirement Accounts (Pension, 401(K), IRAs) and Life Insurance.
- The Schedule of Trust Assets is an important Information Sheet (usually at the back of the Trust Instrument);
- Without the Schedule, an asset could become lost due to the Trust Beneficiaries being unaware of its existence;
- A General Note of Assignment is used to transfer miscellaneous house objects and personal effects to the Trust;
- Real Estate is transferred by retitling the Deed into the name of the Trust and preparing Tax Forms.
- Bank Accounts and Traditional Brokerages can be retitled into the name of the Trust;
- Retirement Accounts, including IRAs, and Life Insurance, can rely on Beneficiary Designation. You can relate these to the Trust by naming the Trust as a beneficiary, often as a contingent beneficiary;
- Beneficiary Designations may be inadequate as you cannot list or name a “Beneficiary Class”, i.e. a category of relatives, or your bloodline and heirs- at-law.
In conclusion, if an Asset is not owned or related to the Trust it will be handled outside of the Trust terms. Avoid having an Asset without a succession or inheritance mechanism. If no mechanism in place, it can be owned or related to the Trust, which avoids having to hire a lawyer to assist in its post death collection.