03/04/2013

What is a Certification of Trust?

Once a person has written a trust, they are left with a rather long document. Trusts can range from a few pages to forty pages or more. Given the burden of lugging around a burdensome document, California law allows for a person to create a certification of trust to provide third-parties in lieu of providing the trust document itself. 

A certification of trust may contain the following information per Prob C § 18100.5(b)

(1) The existence of the trust and date of execution of the trust instrument.

(2) The identity of the settlor or settlors and the currently acting trustee or trustees of the trust.

(3) The powers of the trustee.

(4) The revocability or irrevocability of the trust and the identity of any person holding any power to revoke the trust.

(5) When there are multiple trustees, the signature authority of the trustees, indicating whether all, or less than all, of the currently acting trustees are required to sign in order to exercise various powers of the trustee.

(6) The trust identification number, whether a social security number or an employer identification number.

(7) The manner in which title to trust assets should be taken.

There are two benefits of creating a certification of trust.  First, it is much easier to carry around to due its shorter length than a trust.  Second, the certification of trust maintains the trust's privacy as to distribution specifics, the most confidential part of the trust. One reason why people choose to write trusts is because of the privacy aspect. Generally speaking, a trust document will not become a public record as opposed to a will. A certification of trust ensures that the trust's privacy remains intact. In particular, the relevant part of the statute reads "The certification of trust shall not be required to contain the dispositive provisions of the trust which set forth the distribution of the trust estate." Prob C § 18100.5(d).

It is standard practice for an attorney to write a certification of trust for the client along with the trust. This is not particularly difficult for the attorney because the trust contains the required contents of the certification of trust.

If a third-party refuses in bad faith to honor the certification of trust, they may be liable for damages and  attorneys fees. Prob C §18100.5(h).  Thus, the law has teeth to it to deter a third-party from being overly demanding by insisting on seeing the trust document instead of the certification of trust.