An important aspect of using a trust is ensuring that the trust is properly funded with assets that are appropriate for being held in trust. While not all assets should be held in trust, particularly those with a tax deferral aspect, most bank and financial accounts should be properly funded in the trust by conveying title of the assets to the trustee. This entails reaching out to the bank or financial institution and transferring existing accounts to the trustee or in some cases re-opening the accounts in the name of the trustee depending on the bank or financial institution’s policies.
Often the bank or financial institution will ask for a copy of the trust. While the question is legitimate so that the financial institution can verify the trustee, its powers and validity, this is an intrusion upon the assets owners privacy and unnecessary. Under the probate code, the asset owner who is desirous of retitling assets in the name of the trustee may present the financial institution with a certificate of trust in lieu of providing a complete copy of the trust instrument.
A certificate of trust is a signed summary of the trust and its relevant terms. At a minimum, the certificate should set forth the name of the person or persons who created the rust, the name of trustee, the tax identification number of the trust, the power of the trustee and whether or not the trust has been revoked or modified. The important matter is that those provisions of the trust that address disposition of the trust assets and distributions do not have to be disclosed and may remain confidential.
Under certain circumstances any bank or financial institution who refuses to accept a properly completed certification and instead demands the trust itself may be sued for damages and attorney fees related to the refusal to accept the certification. While the bank or financial institution has legitimate concerns, anyone outright demanding a complete copy and refusing to accept a certification that complies with law should be seen as probably a good sign that the particular bank or financial institution will not be the best choice in terms of cooperation and ease to work with for the trust accounts. In those cases the trustee should look elsewhere for banking and financial services.