If you’ve created a Revocable Living Trust or are responsible for administering one, it’s important to understand the documents that ensure everything goes according to plan.
Here’s a breakdown of the key documents involved in a Revocable Living Trust and how they work together:
The Trust Agreement
The Trust agreement is the rulebook for how the Trust operates. It’s the backbone of the Trust administration process and provides the framework for the other documents.
It outlines details such as:
- The Trust creator (often referred to as the “Settlor” or “Grantor”): This is the person who sets up the Trust, transfers assets into it, and determines the terms.
- The Trustee: This person or institution is in charge of administering the Trust. The Trustee ensures that the Trust creator’s instructions are followed and manages the Trust’s assets on behalf of the beneficiaries.
- The beneficiaries: These are the people or entities that benefit from the Trust assets.
The Trust agreement also specifies how assets should be managed and under what circumstances the beneficiaries will receive distributions.
The Certification of Trust
A Certification of Trust is a short version of the Trust agreement. It gives the basic details (such as the Trust name and the Trustee’s authority) without revealing all the specific terms.
It’s often used when the Trustee needs to prove their authority to manage the Trust’s assets but doesn’t want or need to disclose the entire Trust agreement.
For example, if the Trustee needs to open a bank account, the bank will likely request proof that the Trustee has the authority to act on the Trust’s behalf. The Certification of Trust provides this verification while keeping sensitive information about the Trust (such as its assets and beneficiaries) private.
The Certification of Trust allows the Trustee to act on the Trust’s behalf efficiently while maintaining the privacy of the Trust’s full terms.
The Pour-Over Will
A Pour-Over Will acts as a safety net for any assets that were not transferred to the Trust during the Trust creator’s lifetime. It ensures those assets still end up in the Trust after the Trust creator’s death instead of passing according to state law.
For example, if a bank account or piece of property wasn’t transferred to the Trust during the Trust creator’s lifetime, the pour-over will “catches” those assets and moves them into the Trust after death.
This document essentially “pours” any remaining assets into the Trust, ensuring they are eventually handled under the Trust’s terms. This keeps things organized and ensures that all the Trust creator’s assets are distributed according to their wishes.
The Transfer Documents
Transferring assets to the Trust ensures that assets are legally recognized as part of the Trust and will be distributed according to the Trust terms.
How assets are transferred to the Trust depends on the type of asset. For example:
- Personal Property Transfer: transfers personal items, like jewelry or artwork
- Deed: transfers real estate
- Act of Transfer: transfers various assets such as business interests (for example, ownership in a corporation, partnership, or LLC)
The Memorandum for Tangible Personal Property
A memorandum for tangible personal property allows the Trust creator to specify how certain personal property, like furniture or family heirlooms, should be distributed after death.
As of January 1, 2021, a memorandum for tangible personal property is legally binding under Georgia law as long as it meets certain legal requirements.
The memorandum offers flexibility by allowing the Trust creator to change how certain items of personal property are distributed without needing to update the entire Trust. Any tangible personal property not distributed by the memorandum passes according to the Trust instructions.
We are here to help
Each of these documents plays a crucial role in ensuring that a Revocable Living Trust is properly created, managed, and executed. Whether you’re setting up a Trust for the first time or administering one, understanding each document’s function will help you feel more confident and in control of the process.
If you need assistance with Trust administration or understanding these documents, we’re here to help. Call us today at (678) 784-4150 to schedule a consultation.
