Certification of Trust: What’s the Big Deal?

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For such a diminutive document in your large JGB Trust Portfolio binder, your Certification of Trust (herein “COT” for short) does more than its share of heavy lifting for your estate plan. At first glance, this document may seem superfluous; something your attorneys stuck in the stack of documents just to increase the page volume and make everything seem that much more impressive. However, the COT performs important functions in your estate plan that should not be overlooked. In this article, we will examine the lifecycle and function of your COT so you have a better understanding of its purpose and, therefore, can employ the COT to its highest and best use.

At the Creation of the Trust

At the creation of your JGB Trust Plan, your JGB attorney provided you with a COT. This gives you the means to transfer assets to your trust (“funding your trust”) without disclosing a full copy of the trust document. The COT provided included the name of the trust and the trustees along with a disclosure of the most common financial and real estate powers wielded by said trustees. You were provided with additional paper copies of the COT and an electronic copy that could be transmitted to multiple parties as needed.

At the Disability of Grantor

When you (the Grantor) become incapacitated, a new COT is generated in order to recognize your incapacity under the terms of the trust and to alert others to the person who now has the authority to transact business on behalf of the trust as the successor trustee. In many cases, an EIN number will be acquired from the IRS by your JGB attorney and included in the new COT. This new COT allows your successor trustee to be recognized as the person in charge of your trust by any financial institution where you own assets/accounts and allows your successor trustee to transact business with anyone on your behalf with your real or personal property.

At the Death of Grantor

When you pass away, a COT is again generated in order to recognize your death and to either affirm or replace the acting trustee. This document is often referred to as the “Administrative Trust COT.” Your successor trustee will use this document to settle your estate; this COT acts as proof of their authority to transact business on your behalf, regarding the trust, because of your death.

Creation of Subtrusts

If your trust splits into separate subtrusts for your beneficiary after your postmortem administrative period is completed, then these separate subtrusts will each have their own COT to represent their “silo” or portion of the trust. Often clients ask, “Do my children need to create a new trust to receive their inheritance from me?” The answer in this type of situation is “no.” Your original trust document remains as the trust document for the subtrusts. Each of the subtrusts is recognized as a separate and distinct entity by its specific COT. Each subtrust COT will recognize the trustee of the subtrust along with the financial and real estate powers the trustee has. These subtrusts will also have respective EINs and will trace the origin of the subtrust to its original root trust.

Frequently Asked Questions About COTs

Why do we need these goofy things?

The COT, in its various iterations, is designed to protect your privacy and the privacy of your beneficiaries. Financial and real property companies really only need minimal information about your trust to conduct their transactions. There is very little reason why you should ever over-disclose information about your trust, its contents and/or terms to anyone that does not require said information to complete whatever transaction you are entering into with them.

My financial institution says they won’t accept the COT.

Well, your trust documents are yours to disclose to whomever you wish. If your financial institution is saying they can’t or won’t accept your COT, there are two things you should realize: 1) not accepting a COT is their internal policy; and 2) their policy violates the Virginia Code. I suggest that if you run into this type of issue, you contact your JGB attorney for assistance. If the offending institution continues to maintain its position, it is well within your right and power to ‘vote with your feet’ and walk your business to another financial institution that follows the law.

Do my kids need a copy of my COT now?

Probably not, unless they are current Co-Trustees with you.

Does my COT need to be notarized?

Yes, your COT is a sworn statement by the signing, attesting to the content of the COT for others to rely upon.

Final Thoughts

Your COT is a very important tool in the estate planning toolbox you have acquired from your JGB attorney. It can assist in maintaining your privacy, while proving authority to act (and a description of the included powers) for your trustee. Periodically, financial institutions may ask you for an updated COT. When this happens, contact your JGB attorney. In these instances, there is nothing wrong with your older COT; it’s just that some institutions want periodic updates on the information they have regarding your trust so they can confirm they are still dealing with the appropriate person as the trustee.

I hope this article helps you understand and better utilize your COT. If you have questions or changes you would like to discuss regarding your estate plan, do not hesitate to contact us to schedule an appointment with your JGB attorney.

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