Using a trust to manage your assets has many benefits, but one of the biggest downsides is that it can be difficult to prove that the trust exists and that you have the authority to act on its behalf. If you need to pass a background check or prove your identity, showing a copy of your trust document won’t be enough.
A Certificate of Trust can solve this problem. It’s an official document that shows others that you are legally authorized to act on behalf of a trust, and includes only information that is absolutely necessary for proving your authority.
What is a Trustee?
The person who creates the trust, also known as the settlor or grantor, appoints someone to manage the trust’s assets. This person is known as the trustee, and they are responsible for managing those assets according to the terms outlined in the trust document. The terms can specify how and when distributions may be made from the trust, who has access to what information about the trust and its beneficiaries (whoever will receive distributions from it), and much more.
It’s important for trustees to have solid proof of their authority. After all, someone could be falsely claiming to be a trustee if they don’t have any evidence to back up their claims.
What is the Purpose of a Certificate of Trust?
A Certificate of Trust is a summary of the terms of an existing trust. It tells people that you have a trust, how it’s set up and who your successor trustees will be when you die.
The purpose of the Certificate is to save your successors the time and expense of locating and producing trust documents when they need them. All they need to do is present the Certificate to banks, title companies or whomever else needs it.
What are the Contents of a Certificate of Trust?
Your trust documents should contain your instructions on how to appoint a trustee.
Some people will list their spouse as the first trustee, then their children as the eventual successor trustees. Others will simply name a family member or close friend as the only trustee. Some may decide to name a corporate trustee, such as a local bank or trust company, after considering the advantages of that option.
The Trustee is the legal owner of the assets and property included inside the Trust. As a result, he or she has a legal obligation to fulfil fiduciary responsibilities to the beneficiaries. Acting in their best interests might imply a variety of things, depending on how the Trust interprets it. Trustees may be expected to manage and administer Trust assets, record costs, submit taxes on Trust revenue, distribute profits or monies to beneficiaries, and other duties.
While trusts are recognised and legitimate in every jurisdiction, there are no universal or standard rules governing them. This implies that it’s critical to understand both individual and particular state legislation surrounding Trusts in the state where you live.
States can enact their own legislation, particularly when it comes to what comprises a Certificate of Trust. A Certificate of Trust must follow certain requirements according to the state in where the Grantor resides in order to be regarded as valid.
Not all states have legislation provisions on Trust Certification, but those that do do so. If you are dealing with a Trust in any of the states listed below and the Trust Certification conforms with the state statutes, banks and other institutions must recognise the certification or risk legal and financial penalties.