Category Archives: Trusts

Trust Certification

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I am often asked to help walk a client through a trust certification form. Either for a re-fi on their mortgage or a new bank account. After filling out 25 of those, or more, the last year I thought I would post it here to help my readers know exactly what is needed. This is a sample trust certification or certification of trust or certified extract of trust or certified abstract of trust.  Here you go:

CERTIFICATION OF TRUST
PURSUANT TO CALIFORNIA
PROBATE CODE SECTION 18100.5

I/We, ________________________________________, [enter your names here] trustee(s) of the ______________________________ [name of your trust here] confirm the following facts1. The ________________________________________ [name of your trust] is currently in existence and wcreated on ______________________________ [Date your Trust was signed].

2. The settlor(s) of the trust are as follows: _____________ [enter your name(s) here]
3. The currently acting trustee(s) of the trust is/are:__________ [enter your name(s) here]
4. The power of the trustee(s) includes:
a. The powers to sell, convey and exchange ¨ Yes ¨ No (check one) [most likely YES]
b. The power to borrow money and encumber the trust property with a deed of trust or mortgage
¨ Yes ¨ No (check one)[most likely YES]
5. The trust is ¨ revocable; ¨ irrevocable (check one) [typically these are filled out for REVOCABLE trusts but of course some, especially after death, may be irrevocable] and the following party(ies) if any, is/are identified as
having the power to revoke the trust: ______________ [your name(s) here]
6. The trust ¨ does, ¨ does not have multiple trustees (check one). If the trust has multiple trustees, the
signatures of all the trustees or of any
of the trustees is required to exercise the powers of the trust.
7. The trust identification number is as follows:
(Social Security Number/Employee Identification Number) [typically the social security of either settlor goes here]
8. Title to trust assets shall be taken in the following fashion: ________________ [Your name(s) as trustee of the _____ trust, dated ______________ ]
CERTIFICATION OF TRUST PURSUANT TO CALIFORNIA PROBATE CODE SECTION 18100.5

The undersigned trustee(s) hereby declare(s) that the trust has not been revoked, modified, or amended in any
manner which would cause the representations contained herein to be incorrect. This certification is being signed
by all of the currently acting trustees and is being executed in conformity with the provisions of California Probate
Code Section 18100.5, Chapter 530, Statutes of 1993.
IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below.
________________________________________
________________________________________
By: ____________________________________
Trustee
State of
County of
On ______________________________ before me, , Notary Public,
(here insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature ____________________________________(Seal)

Independent Trustee is a Special Trustee

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Not all trustees are independent and not all trustees are special… but the terms “independent trustee” and “special trustee” have the same meaning in estate planning. They are an unrelated and economically disinterested person with limited authority in a trust. Not all trusts will have such a trustee as the vast majority of trusts just have a standard trustee. However, in some situations this special trustee is advisable.

In one of the trusts the term is defined as:

An Independent Trustee or Special Trustee shall mean a Trustee who is neither a Beneficiary of any trust established under this instrument nor a person who has transferred or joined in the transfer of property to the trust estate.  If a General Power of Appointment held by a Beneficiary of a trust may only be exercised with the consent of the Independent Trustee, the term Independent Trustee also means a person who does not have a substantial interest in the property subject to the power which is adverse to the exercise of the power in favor of the Beneficiary, the Beneficiary’s estate, the Beneficiary’s creditors, or the creditors of the Beneficiary’s estate.  If at any applicable time no Trustee then serving is an Independent Trustee, the first successor Trustee named or designated herein shall serve as the Independent Trustee for the sole purpose of exercising or not exercising the Independent Trustee’s powers.  If no successor Trustee named or designated herein would qualify as an Independent Trustee, the then serving Trustee shall petition the Court having jurisdiction over the internal affairs of this trust for the appointment of an Independent Trustee for the sole purpose of exercising or not exercising such powers.

In that same trust, later on the document names the Independent or Special Trustee with the following language

For any trust created herein, but only during the lifetime of the Settlor(s), the Settlor names as Special Trustee and successor Special Trustee, in the order and priority indicated, the persons listed below. The Special Trustee’s duties shall be limited to the exercise of discretion under this trust, and the Special Trustee shall not be concerned with other aspects of trust administration. The Special Trustee shall receive reasonable compensation.   Any Special Trustee may resign. The Special Trustee is JOHN DOUGH. If Mr. Dough is unable to act the Settlor(s) reserve the right to name a new Special Trustee provided that the new Special Trustee is not a related party as defined by IRC Section 672(c).  Notwithstanding anything herein to the contrary the Special Trustee shall specifically have the following powers exercisable as related to the children, and subsequent heirs, of the Settlor(s):

                        i.    the right to modify or amend the trust instrument to achieve favorable tax status or respond to changes in the Internal Revenue Code, state law or the rulings and regulations there under;

                        ii.   modify the terms of any power of appointment granted by the trust (although a modification or amendment may not grant a beneficial interest to any individual or class of individuals not specifically provided for under the trust instrument);

                        iii.  power to remove and name a new Trustee, trust advisor, investment committee member or distribution committee member;

                        iv.  terminate the trust;

                        v.   veto or direct trust distributions;

                        vi.  change situs or governing law of the trust, or both.

                        vii. appoint a Successor trust protector

                        viii. interpret terms of the trust instrument at the request of the Trustee; and

                        ix.  advise the Trustee on matters concerning a beneficiary. 

Hopefully this helps you to know why these trustees are special and independent   If you want to discuss how such a trustee could improve YOUR estate plan let me know.

-John

Best States for Dynasty Trusts – 2012

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Each year my law school classmate, Steve Oshins, puts out a list of the top states to use for a “dynasty trust” and for a asset protection trusts. He just released his dynasty trust rankings.

A dynasty trust is a trust designed to live as long as possible, from generation to generation, or a “Rockefeller Trust” as I like to call them. The government, long ago, determined that creating a taxable event at each death was important… and likewise smart attorneys came up with ways around the tax.  The dynasty trust is the best way to pass wealth, for many generations, without tax.

Steve Oshins, a 1994 graduate of the McGeorge School of Law (University of Pacific), like me, is one of the nation’s foremost experts on dynasty trusts. He has been quoted in major publications like Forbes and the Wall Street Journal.  Steve often speaks about dynasty trusts and each year publishes his ranking of the top states to house your dynasty trust. Here is the link to Steve’s latest rankings.

 

Listing all assets in estate planning

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Below I have posted a sample of the information we like to have when we do estate planning. Though we do not require the information it’s helpful to us. It’s helpful in different ways. Let’s discuss.

First, the dollar amounts are certainly not required but knowing the approximate estate size helps determine what plan is right for YOU.  Often clients do not think about the true size of their estate until they put it on paper. Often it adds up to more than they thought. That is, by the time you add your IRA, 401k, life insurance, and other things to your home equity and savings accounts the value can jump up!

Second, we can’t fully fund a trust if we don’t know about all your accounts.  Having the name, account number and address helps us to help you fund the trust!

Third, it’s a great help to your family, friends, loved ones and trustees later. That is, at your incapacity or death how do they know what assets exist? The only way they know is if they have a list. Where do they get a list? From YOU.

Here’s a sample of the questions we go over with you during the estate planning process.

 

 

1)      CASH AND SAVINGS (Please supply bank name, address and account number)

Checking Account                   $ ___________

Certificates of Deposit (CDs)  $ ___________

Credit Union                            $ ___________

Savings Account                      $ ___________

Money Market                         $ ___________

TOTAL CASH AND SAVINGS                                $ ______________

 

2)     MARKETABLE SECURITIES (Please include bank name, address and account number)

Stocks                                      $ ___________

Bonds                                      $ ___________

Mutual Funds                          $ ___________

Annuities                                 $ ___________

Gold and Silver                       $ ___________

TOTAL OF MARKET SECURITIES                       $ ______________

 

3)     REAL ESTATE  (Please list address, city and state)

TYPE OF PROPERTY   COUNTY            MARKET VALUE -  MORTGAGE = EQUITY

 

i.   _______________________________           ______________________________________

ii.  _______________________________           ______________________________________

iii. _______________________________           ______________________________________

TOTAL EQUITY IN REAL ESTATE                      $ _______________

 

 

 

 

 

 

4)     FIXED AND OTHER ASSETS (Please supply additional information if available)

 

Business Interests                    $ ___________

Limited Partnerships               $ ___________

Notes Due                               $ ___________

TOTAL OF FIXED AND OTHER                           $ ________________

 

5)     RETIREMENT PLANS (Please bring bank name, address and account number)

 

IRA (Standard Deductible)      $ ___________

IRA (Roth IRA)                       $ ___________

Keogh                                      $ ___________

SEP                                         $ ___________

401k                                        $ ___________

403B                                        $ ___________

Profit Sharing Plan                  $ ___________

TSA                                         $ ___________

ESOP                                      $ ___________

PASOP                                    $ ___________

Deferred Compensation          $ ___________

Pension Plan                            $ ___________

TOTAL OF RETIREMENT PLANS                        $ ________________

 

6)     LIFE INSURANCE (Please list life insurance company and agent, if you know)

 

Face Value of Policy #1          $ ___________  (Term  or   Whole Life?)

Face Value of Policy #2          $ ___________  (Term  or   Whole Life?)

Face Value of Policy #3          $ ___________  (Term  or   Whole Life?)

 

TOTAL FACE AMOUNT OF LIFE INSURANCE  $ ________________

 

7)      OTHER ASSETS (Cars, boats, collectibles, etc.)

$ ___________

$ ___________

TOTAL OF OTHER ASSETS                      $ ________________

 

 

 

GRAND TOTAL OF ALL ASSETS                        $ ________________

No trustee named on trust… how to fix that….

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There are many instances where a California trust ends up without a trustee in charge.  When I do estate planning I try to come up with a number of back-up choices and thus this doesn’t happen for clients when I do the estate plan. However, not everybody comes to me for their planning. Some only come to clean up messes created elsewhere.  The lack of a trustee is one of those messes. There are many reasons a trust can be without a trustee. Among those:

A person has died;

A person is sick or unable to act;

A person doesn’t want to act as trustee;

Any of 100 other reasons….

So, let’s say mom has died and has a trust that names daughter #1 as trustee and no back up. I have met with clients like that.  I advise them to put in a back up and they say they don’t need to because daughter #1 will do it. I go through the list of reasons that daughter #1 might not be able to act and usually I can get them to put a back up; another family member, a friend, a professional fiduciary, a professional (CPA or attorney), or a bank or other financial institution. There are many good options. In fact, I encourage people to put several options.

However, not all attorneys do this. Some accept mom’s idea and just have daughter #1 as successor trustee. Of course, daughter #1 has died or in some other way is unable to act and that’s when I am brought in… to CLEAN UP THE MESS.

Unfortunately, in many cases this involves going to probate Court and getting a Court order appointing a successor trustee. In some cases the beneficiaries are vote on a trustee but often the beneficiaries are minors or they don’t get along. Thus we end up going to probate Court.  The key here is planning ahead to avoid this problem!

Hopefully you are reading this during the planning process when the successor trustee situation can be properly addressed. If not, and death or disability have created a mess, contact me and I will fix it for you!

-John

Court petitions to change IRREVOCABLE trusts

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An irrevocable trust means it cannot be changed, right?  Well, yes and no. There are situations where an irrevocable trust can be changed.  There are even situations where that irrevocable California trust can be changed AFTER DEATH.

Probably the simplest to petition the Court after getting all the beneficiaries to agree to the change. However, this is often a problem due to minor beneficiaries or even un-ascertained beneficiaries (that is, not yet born heirs!).

Another common situation is if it’s uneconomical to continue the trust. This number is generally set at $20,000. If the trust is less than $20,000 then it can likely be changed or ended.

A great tool is the change in circumstances argument.  For example a trust was set up primarily for tax savings purposes back when the estate exemption was $600,000 and now the exemption is $5.12m. A lot has changed!

These are just some of the ways an irrevocable California trust can be changed. Contact me to discuss if the irrevocable trust can be changed in your case!  -John

Transferring Credit Union Accounts to a Trust

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Transferring, or connecting, ALL assets to a trust is a crucial part of the California estate planning process and this includes CREDIT UNION ACCOUNTS.  Just like bank accounts, stock accounts, bonds, mutual funds, and all other such monetary assets… credit union accounts need to be in your California revocable living trust. Listing the assets on the schedule of assets is important but more important is notifying the credit union so they know to actively change the account vesting into your trust.

In my experience credit unions are often easier to work with than banks, for these trust changes, so it shouldn’t be too difficult to accomplish.  Most credit unions have a certification of trust form that you would fill out.  Your estate planning attorney can help you fill the form out.

Any questions about trust funding during life, or after death, let me know.   -John

What is the purpose of a trust?

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Trusts serve many purposes in estate planning for California residents. There are also many different types of trusts (inter-vivos and testamentary to name two main categories).  Inter-vivos trusts are created during life and often called “living trusts” or “grantor trusts.”  These trusts are most commonly set up as revocable trusts but sometimes are done as irrevocable trusts. The primary purposes of a revocable trust are: probate avoidance and orderly distribution of assets after death.  Irrevocable trusts generally add tax planning (i.e. avoiding or minimizing estate, gift, inheritance and even property tax).  The key is working with an attorney who is experienced and knows the in’s and out’s of trusts to make sure yours gets set up correctly.

Deed Transfers to NON-California Trusts

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We will take care of the deed Transfers to NON-California Trusts if you or your client own real property in California.  We will take care of the proper deed format as well as the preliminary change in ownership (a required state form).  We will charge $500 per California property and that includes obtaining the current vesting deed and doing the Preliminary Change in Ownership form. If you or your client own real estate in California let us help you get it into your trust. We can do deeds for commercial property, vacation homes, timeshares, bear land, farm land, deeds of trust, and any other type of real property interest you can think of!

Let us make it easy for you! Hire us to take care of your deed transfer needs.

Deed Transfers to California Trusts

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A key component of the California estate planning process is to FUND YOUR TRUST.  What does that mean exactly? That means taking an active role in transferring your assets to your trust.  At our office we assist with transferring each asset; bank accounts, stock brokerage accounts, life insurance, bonds, stocks, and the list goes on… oh ya, and REAL ESTATE.  It is crucial to re-title ALL real estate holdings into the trust.

Why do I say ALL real estate holdings?  I say this because many people have a low value parcel of land in Palmdale, or a strip of land next to their parent’s house, or a timeshare. These all should be transferred to your trust to make things easier and cheaper for your loved ones.

Also transferring property held in other states is important. If you own property anywhere in the country make sure it gets transferred to your California trust. We can help facilitate that.  In some states we can do the deeds ourselves and others we hire a deed service.

Let us help you fund your trust!