Certification of trust: what it is, what it contains and how to open a trust account

What a certification of trust contains

Trusts are governed by state law, so what a certification may or must contain depends on the state. Several states have a statute on this. The Uniform Trust Code, a model law, includes one, but a model law is law only in states that enacted it, and each state words its own version. California’s section is its own statute. We read the sections for Florida, Ohio, Arizona and California, and they agree on the core: the trustee gives the certification instead of a copy of the trust.

The names vary too. Certification of trust, certificate of trust and trust certification are used for the same kind of document. A firm may also have its own trust certification form. Florida, Ohio and Arizona list what the certification contains. California says it may confirm or contain the items below. This is what each of the four sections lists:

FL is Florida Statutes 736.1017, OH is Ohio Revised Code 5810.13, AZ is Arizona Revised Statutes 14-11013 and CA is California Probate Code 18100.5. A dash means the section does not list the item. It does not mean a firm won't ask for it, and these four states are not every state.

All four say the certification need not contain the dispositive terms of the trust, which are the terms that say who receives what. Each also lets the person relying on it assume the facts in it are correct, unless they know otherwise. In Florida the section says such a person is not liable to any person for so acting, and the other three say much the same.

When you need one

A certification is the document a trustee gives when a third party needs proof of the trust without the full instrument. Three settings:

• Opening a trust account. The firm needs to know the trust exists, who the trustee is and what the trustee can do.
• Retitling an account into a trust. Florida, Arizona and California let the certification state how title to trust property is taken, which is the wording the account will carry.
• Real estate. California lets the certification include a legal description and be recorded with the county recorder. Ohio has a separate recordable instrument, a memorandum of trust, that the trustee acknowledges (Ohio Revised Code 5301.255). Whether a title company wants one or the other is a question for the title company or an attorney.

Certification of trust, full trust agreement, affidavit or abstract

• Full trust agreement. The whole instrument, including who receives what. The point of the certification is that a recipient can rely on it without reading this.
• Certification of trust. A summary of the facts a third party needs, with a statement that the trust has not been revoked, modified or amended in a way that would make it incorrect.
• Affidavit of trust or abstract of trust. Names that firms and states use for similar summaries. We did not find one definition that applies everywhere, so ask the firm what it needs the document to say and whether a certification of trust will do.

Who signs, and is it notarized

• Florida, Ohio and Arizona: any trustee may sign it or otherwise authenticate it. The sections do not mention a notary.
• California: the section says the certification is an acknowledged declaration signed by all currently acting trustees. An acknowledgment may be made before a notary public, and the notary's certificate verifies only the signer's identity (Civil Code 1181 and 1189). Confirm the detail with a notary or attorney.
• Any state: a firm can ask for a notarized signature or for something else its own procedures call for, so the question for the firm is what it will accept before the trustee signs.

How to open a trust account

Each firm has its own application and document list. These are the pieces to settle.

1. Ask the firm for its trust account application and its list of documents. Ask also whether it takes a certification of trust, uses its own trust certification form or wants other trust pages.
2. Get the certification of trust signed. Check who signs under the state's statute and whether the firm wants a notary. If the trust has co-trustees, the certification says how they sign.
3. Settle the tax ID. A trust can have its own EIN. A revocable trust with one living grantor can sometimes use the grantor's name and Social Security number instead: the IRS says the trustee of certain grantor-type trusts does not need an EIN if the trustee gives payers the grantor's name and taxpayer identification number and the trust's address. Under the federal regulation (26 CFR 1.671-4), a husband and wife who file one joint return count as one grantor, and a trust treated as owned by two or more grantors must furnish the trust's own name, TIN and address. The trust's tax preparer or attorney confirms which applies. A broker-dealer collects a taxpayer identification number before it opens an account, with an exception for a customer who has applied for one (31 CFR 1023.220).
4. Have each trustee’s identification ready. For an individual, a broker-dealer's identity program collects a name, date of birth, address and identification number, and may verify with an unexpired government-issued photo ID. For a customer that is a trust, it may use documents showing the trust exists, such as the trust instrument. The rule defines the customer as the person that opens the account, and a broker-dealer can also look to the individuals who have authority or control over it (31 CFR 1023.100(d) and 1023.220(a)(2)(ii)(C)). Ask whose identity the firm will verify.
5. Agree the account title. Use the wording the firm gives you, and check that the trust's name and date on the application match the certification. In Florida, Arizona and California, the certification may state how title is taken.
6. Add a trusted contact. FINRA Rule 4512 has a FINRA member ask for a trusted contact person at account opening. The rule says the account can still open if the customer does not give one.
7. Sign and submit. Each person signs where the application asks, and the firm reviews the package before the account opens.