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Simplify Estate Planning With a Memorandum of Trust

Troy Werner and his family

Written by Troy Werner

Troy Werner has been an indispensable asset to The Werner Law Firm since joining in 2009, providing exceptional legal service to its clients.

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POSTED ON: May 28, 2019

It is estimated that over 40% of individuals between the ages of 53 and 71 do not have estate planning documents in place. This number decreases to only 19% of those beyond this age, but it is still an alarming number. Reasons for avoiding the planning vary, but many cite the burden of the task as a deterrent. While […]

It is estimated that over 40% of individuals between the ages of 53 and 71 do not have estate planning documents in place. This number decreases to only 19% of those beyond this age, but it is still an alarming number. Reasons for avoiding the planning vary, but many cite the burden of the task as a deterrent.

While it is true that making adequate plans for our eventual passing can be strenuous, the consequences of not doing so can be detrimental. Even while we are still living, and without a trust in place, there is no way to ensure that our end-of-life care is going to align with our predetermined desires. Following our passing, not only can loved ones be dragged through the costly and lengthy process of probate, but the judge can ultimately award our assets to those whom we did not intend.

These considerations of consequences of failure to plan can outweigh the dread of gathering together what is necessary for constructing a document of our final wishes. Thankfully, after doing the hard work of transferring your assets to a living trust, adding a Memorandum of Trust can make for smooth sailing. A Memorandum is added to an established trust, and is used in lieu of providing institutions with the full document.

Moving Assets to a Living Trust

Before drafting a Memorandum, a trust needs to be developed. When forming a living trust, assets are transferred from ownership of the individual, to ownership of a trustee. Because the assets are no longer owned by an individual, distribution is no longer subject to the process of probate. As many have heard tale, the process of probate can be long, daunting, and stressful. Aspects such as unclear directives; outstanding debts; and disputes over inheritance can take center stage during probate, leaving the courts with the final decision over how your belongings are distributed.

The process of moving assets to a living trust involves quite a bit of groundwork. Documentation of assets will need to be gathered together and categorized. Deeds for real estate will need to be transferred, and financial accounts will need to be assigned. Specifications for stocks, retirement accounts, and tangible property – along with any associated insurances – will need to be outlined, and plans for long-term care in the event of your incapacitation can be included. Many institutions provide their own forms for these purposes, and the assistance of an attorney can help you in ensuring that you haven’t missed anything for inclusion.

A trust not only provides the creator with full discretion over how things are to proceed during this life – and after – but also provides a flexibility for altering the contents as needed. When seeking to change the contents of a trust, the grantor must only add an amendment to the existing document. Any amendments will supersede what was specified, before. An amendment is used to add or change beneficiaries; to add or subtract from assets; to include new specifications; or to name additional – or new – trustees.

As part of the creation of a trust, you will be naming at least one trustee. This trustee will be responsible for executing the specifications that you have outlined in the trust. Even if you are naming yourself as the trustee of the estate – such as with a revocable living trust – institutions will demand to see verified documents of the transfer. This is where the Memorandum comes in. A Memorandum allows you to provide the minimum amount of information necessary to the interested parties, and provides a layer of privacy from prying eyes.

What’s the Purpose of a Memorandum of Trust?

A Memorandum of Trust is an affidavit which can be provided as verification in place of revealing the full trust to others. It varies from a certificate of trust, in that it is designed to transfer, and not to open, assets under the name of the trust. Memorandums can be filed with the county recorder, and can be submitted to financial institutions as verification of trust ownership. In California, institutions can face penalties if they refuse to take the Memorandum as adequate documentation of transfer.

What filing the Memorandum provides is both ease of information transmission, and privacy in regard to the details of how you are orchestrating the trust. Rather than providing the full document – and all of the specifications therein – the Memorandum simply points back to the existence of the trust. It works to keep intimate details, such as the names of your beneficiaries and the sum of your assets, undisclosed.

What the Memorandum Includes

The contents of a Memorandum of Trust tend to be very basic. These documents typically include the following information:

  • Name of the Settlor (or, trust creator).
  • Name and number of the Trust, or social security number of the Settlor.
  • Any rights of revocation of the Trust.
  • Identification of the named Trustee.
  • The rights and powers of the named Trustee.
  • Signatures of witnesses and applicable notarization.

As can be noted, there are no details regarding the actual contents of the trust which are included within the Memorandum document. Institutions are not permitted to ask for any more information than what is included in this list when verifying and initiating the transfer of assets to the trust. If the name or rights of the trustee of the estate is modified through an amendment, the Memorandum need only to be updated, likewise.

When forming your trust with an attorney, you can ensure that the Memorandum of Trust is included in the final documents, ready for your ease of use. If you are completing the documents on your own, you can contact the individual institutions to inquire about their specific memorandum forms for transferring accounts. Many company websites include a digital list, outlining the basic information which is required for successful transfer. For those less technologically inclined, institutions should honor a request that the applicable forms be mailed out.

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