Ask the Probate Judge—Certification of Trust
Rudd, appeared March 1, 2007, Albuquerque Journal, Business Outlook
Reprinted with permission
Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.
Q: A few weeks ago your column mentioned a "certification of trust." I have not heard of that before and wonder if you could elaborate. Thank you.
To answer your question, I researched New Mexico's Uniform Trust Code (UTC), which the legislature passed in 2003. The UTC allows a "certification of trust" to prove the existence of a trust.
This method helps to protect the privacy of those who create trusts (settlors). Settlors may not want an institution or person to view the details of their trusts, including to whom the estate will pass after death. So instead of furnishing a copy of the entire trust document, a trustee can give a certification of trust to a bank, brokerage house, or other entity in order to complete the transfer of title of a settlor's assets into the name of the trustee of a trust.
The certification of trust must contain the following information:
(1) that the trust exists and the date the trust document was executed;
(2) the identity of the settlor;
(3) the identity and address of the current 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 co-trustees 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;
(8) the manner of taking title to trust property; and
(9) if an action is to be undertaken through an agent, that delegation of the action to an agent is not prohibited by the trust document.
A certification of trust may be signed or otherwise authenticated by any trustee. The recipient of a certification of trust that will be used to affect title to real property may require the certification to be acknowledged by a trustee so it can be recorded. A notary public can oversee the proper signing of an acknowledgement.
The certification of trust must state that the trust has not been revoked, modified or amended in any way that would cause the statements contained in the certification of trust to be incorrect. However, institutions that rely on the certification of trust without knowledge that it is incorrect are not liable to any person for doing so.
The UTC even contains a provision for a trustee who encounters an institution that is reluctant to accept a certification of trust and instead demands to see a copy of the actual trust document. An institution that demands the trust document in addition to a certification of trust or excerpts is liable for monetary damages if a court determines that the institution did not act in good faith in demanding the trust document.
What does this mean? Institutions ought to accept a certification of trust without requiring the entire trust document. Since my court lacks jurisdiction over trust matters, I do not know whether institutions honor this part of the law in the real world.
If a lawsuit involving the trust has been filed in a court, parties to the lawsuit have the right to obtain a copy of the actual trust document. And, as I mentioned in a previous column, beneficiaries of a New Mexico trust have an absolute right to see the entire trust document.
© 2007, Merri Rudd & Albuquerque Journal, All Rights Reserved