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Certificate of Trust: What is it, and Do I need it?

April 6th, 2022

2022

A Trust created during your lifetime (a revocable living trust) is an important part of any Estate Plan. Trusts can be used for asset protection, tax benefits, to simplify probate and to plan for the financial security of loved ones in the future. But there's more than simply having a Trust - you also need to understand the Certificate of Trust. 


What is a Certificate of Trust?


A Certification of Trust is a legal document that can be used to certify both the existence of a Trust, as well as to prove a Trustee’s legal authority to act. It’s shorter than the actual Trust document, and it can offer pertinent information without making every aspect of the Trust public.

In order to facilitate a transfer of real property into a trust, financial institutions may require the trustee to furnish a certification of trust. In addition, third parties may request a certification of trust to confirm the trustee has the authority to transfer real property out of the trust.


How is a Certificate of Trust Used?


A trustee can use a certification of trust to certify to third parties that the trustee has authority to administer the trust while keeping the terms of the trust confidential.  A Trust Certification gives a Trustee the ability to provide anyone who needs it (think: financial institutions or other third parties) important information about the Trust - like the date it was formed, the legal/formal name of the Trust, who the Trustee is (or Trustees are) and other information institutions may require before allowing a Trustee to act.  


State Specific Requirements - Texas


While Trusts are valid and recognized in every state, there are no universal or standard laws pertaining to them. This means it’s vital to understand individual and specific state law regarding Trusts where you live. 

Particularly when it comes to what constitutes a Certificate of Trust, states can implement their own statutes. To be recognized as valid, a Certificate of Trust must follow proper guidelines according to the state the Grantor lives in.  

Texas Criteria

Texas defines the criteria for a Certification of Trust in Section 114.086 of the Texas Property Code.  The certification should contain:

    1. a statement that the trust exists and the date the trust instrument was executed;
    2. the identity of the creator of the trust;
    3. the identity and mailing address of the currently acting trustee;
    4. one or more powers of the trustee or a statement that the trust powers include at least all the powers granted a trustee by Subchapter A, Chapter 113;
    5. the revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust;
    6. the authority of cotrustees, if any, to sign or otherwise authenticate and whether all or less than all of the cotrustees are required in order to exercise powers of the trustee; and
    7. the manner in which title to trust property should be taken.

Additionally, the certification should contain a statement that the trust has not been revoked, amended, or modified in any way that would make the certification or its statements incorrect.  

Allows You to Maintain Privacy

Note that Texas does not require the dispositive terms of the trust to be fully set forth in the certification.  But, the person who has requested the Certification may request that the trustee provided copies of the excerpts from the original trust instrument (i.e. a will or revocable living trust) and any amendments that designate the trustee and confer power upon the trustee to act in the pending transaction.

In Texas, the Certification of the Trust can be signed by the Trustee


How Do I Get a Certificate of Trust?


A Certificate of Trust is like having an abbreviated version of the Trust on hand. The Trust Certification will essentially be an outline that contains all the important information about a Trust. To create it, you can have an attorney from the Heights Law Group draw up the paperwork for you.

Keep in mind, if you have a Trust with a partner or spouse, you’ll both need to sign the Trust Certification for it to be valid. Once it’s signed and notarized, you may need to record it through your local county office, especially if the trust owns or plans to sell any real estate. 

It’s important to sign a Living Trust in front of a Notary Public. But don’t stress about finding a Notary Public. There are numerous places you can go.  You can typically find a Notary Public at any of the following establishments:

      1.  American Automobile Association (AAA)
      2.  Banks or other financial institutions
      3.  Libraries
      4.  License service centers
      5.  Parcel shipping stores (like UPS)
      6.  Photocopy shops (like FedEx)
      7.  Real estate offices
      8.  Tax Preparer or Accountant Offices

Commonly Asked Questions About a Certificate of Trust:


Who can sign the Certificate of Trust?

Generally speaking, the Grantor (the Trust creator) can legally sign a Certificate of Trust.  In Texas, a Trustee can also sign the Certificate of Trust.  One general exception to this is if you have had a lawyer create the original Trust document. In this case, he or she typically may also sign the Trust Certificate.

How often do I need to update the Certificate of Trust?

There are times when you may need to update your Certificate of Trust. It could become necessary if a Trustee passes, or if your Trust hasn’t been updated in a number of years and many things have changed. Another reason you may need to update your Trust Certificate is if the Trust will be buying and/or selling any property or real estate.

Does a Certificate of Trust need to be recorded?

A Certificate of Trust may need to be recorded in the county that any real property is in.  If you plan to sell any real estate owned or held by the trust, the title company and financial institutions involved may require that the Certificate of Trust be filed in the real property records.  But, that said, if there’s no real property owned by the Trust, there may not be any need to record it.  


Owning a Trust can be a really smart move - especially if your goal is to protect your assets, your loved ones and your legacy. But don’t let all of the hard work you put into creating a solid Estate Plan fall flat because you didn’t do the little things that help everyone involved, like creating a Certificate of Trust. 

Want to learn more about how easy it is to establish a Trust? Call the Heights Law Group to find out how Trust & Will makes creating a Trust (and your Certificate of Trust) easy, fast and affordable.

Contact us today at (832) 810-3373 to find out more.

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