One of the documents that should be a part of your trust-based estate plan is a Certificate of Trust. This legal instrument provides basic, relevant information about your trust to third parties without sharing the full details of the trust document.
What is a Certificate of Trust?
A Certificate of Trust is a document that confirms the existence of a trust, some of its terms, and the trustee’s authority to act on behalf of the trust. It is designed to provide pertinent information about the trust to third parties, such as financial institutions, real estate agents, or other entities with which the trust may interact. Rather than disclosing the entire trust agreement, which can be lengthy and contain sensitive information, the Certificate of Trust offers a more concise overview while still establishing the trust’s validity and the trustee’s authority.
Michigan Requirements
In Michigan, the Certificate of Trust is governed by statutory provisions outlined in the MCL 700.7913. According to the statute, a Certificate of Trust must contain all of the following information:
- The name of the trust, the date of the trust, and the date of each operative trust instrument.
- The name and address of each current trustee.
- The powers of the trustee relating to the purposes for which the certificate of trust is being offered.
- The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust.
- The authority of cotrustees to sign on behalf of the trust or otherwise authenticate on behalf of the trust and whether all or less than all of the cotrustees are required to exercise powers of the trustee.
The statute further provides that a Certificate of Trust may be signed or otherwise authenticated by the settlor, any trustee, or an attorney for the settlor or trustee. The certificate must be in the form of an affidavit. In addition, a Certificate of Trust must state that the trust has not been revoked, modified, or amended in any manner that would cause the representations included in the certificate of trust to be incorrect.
Purpose and Use
The primary purpose of a Certificate of Trust is to facilitate trust administration and transactions involving trust assets. By presenting the Certificate of Trust to third parties, the trustee can verify the trust’s existence and their authority to act on behalf of the trust without disclosing sensitive or irrelevant details contained within the trust agreement.
Some common scenarios where a Certificate of Trust may be used include:
- Opening a bank account or investment account in the name of the trust.
- Transferring real estate or other assets into the trust’s name.
- Engaging in financial transactions on behalf of the trust.
- Providing proof of the trust’s existence and terms to interested parties.
In essence, the Certificate of Trust serves as a practical tool for trust administration, enabling trustees to carry out their duties efficiently while maintaining a level of privacy and confidentiality regarding the trust’s specifics.
Conclusion
In Michigan, a Certificate of Trust plays a vital role in trust administration and estate planning. By providing essential information about the trust without divulging its entirety, this document streamlines transactions and interactions involving trust assets. Understanding the statutory requirements and the significance of the Certificate of Trust is essential for trustees and other parties involved in the administration of trusts in Michigan. If you have questions about creating or using a Certificate of Trust, please schedule time with us. We can provide valuable guidance tailored to your specific needs and circumstances.