A trust is a very useful and helpful estate planning document.  The trust itself contains the instructions for what to do with assets owned by the trust, usually in the form of a written trust agreement.  The written trust agreement should have the names of beneficiaries who are to receive the assets of the trust, whether the named beneficiaries are people, charities, or other entities.  The trust agreement may also contain instructions on how assets should be distributed.  Many trusts distribute assets outright, free of trust, but other trusts have conditions or restrictions on how the assets should be distributed from the trust.  One of the more common restrictions are age restrictions, allowing assets in a trust to be used for a person who is not old enough to handle the assets on their own – like minor / underage children – and then releasing assets when a person is old enough to handle the assets.  This makes the easiest answer to the questions posed above: Follow the instructions in the trust!

Of course, a trust will not contain every step that you might need to take to carry out the instructions of a trust.  The government has certain things you need to do with a trust, and the trust may hold assets with different banks, investment companies, and other similar financial institutions.  A trust may also hold assets that are rented, or used in business operations.

In carrying out the instructions of a trust, you often need to deal with the various entities that hold assets in a trust.  I would like to tell you that this is always a simple, straightforward process, and that the process of dealing with different entities will always be the same, but that is simply not true.  Instead, each different entity seems to have their own policies and procedures.  The law doesn’t dictate exactly how everything will be handled, so carrying out the instructions of a trust means you will need to work with the entities that hold trust assets throughout the process of executing the trust.

 

What Does the Government Require to Execute a Trust?

The government is fairly easy to satisfy with a trust.  In Colorado, a trust should be registered with the county within 30 days of the person who created the trust’s death.  Colorado has a Trust Registration Statement – Form JDF 732-SC, and that is the form that needs to be filed with the county.  Usually that is all that the government needs.  If the person who passed away was receiving government assistance through a program like Medicaid, then the government may want to try to recover whatever the government spent out of the trust assets.  If that is what you are facing, you likely will want to talk to an attorney who specializes in trust administration and Medicaid.  I am not that type of attorney.  I do not represent people in administering trusts (I stick to the estate planning side of things), and I don’t deal with Medicaid recovery situations.  I have friends who handle those types of cases, and I am happy to refer you to people  who can help you, I just don’t handle that side of things.

 

What Do Other Companies and Banks Require to Execute a Trust? 

Banks, investment companies, and other similar financial institutions want to know that the person with whom they are dealing is the properly authorized representative of a trust.  Often these types of companies will want to see a copy of the trust agreement, or want to see a property executed trust statement of authority or certificate of trust.  A statement of authority or a certification of trust are documents that show a trustee has legal authority to act on behalf of the trust in real estate or financial transactions, and these documents need to comply with the statutory requirements under Colorado law.  When properly prepared and executed, a trust statement of authority or certification of trust will give the person carrying out the trust instructions – the successor trustee – the ability to deal with financial institutions and other entities.

Each financial institution, bank, or other similar company will have their own policies and procedures for handling the affairs of a trust and for dealing with a successor trustee.  Not all of the policies and procedures will be the same.  The statutory requirements for a trust statement of authority or certification of trust only help show the successor trustee has authority to act on behalf of the trust, not dictate how every interaction will go.  Instead, if you are a successor trustee carrying out the instructions of a trust, you will need to work with each bank, investment company, or other financial institution to know how you can carry out your duties and responsibilities to distribute trust assets.  Because each institution is slightly different, you will need to become familiar with each institution’s policies and procedures, or you will need to find a good person to contact at each institution to help you through the process.

As much as I would love to say each financial institution has similar, or exactly the same, policies and procedures, that is just not true.  It may take a bit of work to learn how to navigate each institution’s policies and procedures, but you can do it!  I don’t represent people in administering trusts, so I am likely not the expert to tell you how to navigate each entity’s specific requirements.  I do have friends who handle trust administration, and I am happy to refer you to my friend, it is just not part of my practice.

 

Trusts Do Establish the Rules and Instructions to be Followed

Trusts are super helpful in giving you explicit instructions on what should happen to assets inside the trust after someone dies.  A trust can have simple instructions, or complex, detailed instructions on what needs to happen to trust assets.  To execute a trust, you just need to follow those instructions.  Following instructions means you will need to interact with the companies that hold the assets, but that just means you need to follow the trust instructions in the way the financial institutions say it should happen.  It may not be the easiest, breeziest thing you have ever done, but you do have the trust that tells you where everything goes…and that is a great place to start!