Reasons to Use a Memorandum of Trust

When setting up a trust, privacy and efficiency are often top priorities. One tool that can help achieve these goals is a Memorandum of Trust. This document, also known as a Certification of Trust, provides a summary of key information about a trust without revealing all the details contained in the trust agreement. Here’s why you might want to use a Memorandum of Trust.

Protecting Privacy

One of the main reasons to use a Memorandum of Trust is to protect the privacy of the trust’s details. The full trust agreement typically contains sensitive information, such as the names of beneficiaries, the distribution plan for assets, and specific terms of the trust. You can provide necessary information to third parties, such as banks or financial institutions, without disclosing the entire trust document. This helps keep personal and financial details confidential.

Simplifying Transactions

A Memorandum of Trust makes it easier to conduct transactions involving the trust. For example, if you need to transfer property or open a bank account in the name of the trust, a third party may request proof that the trust exists and that you have the authority to act on its behalf. Instead of providing the entire trust agreement, which can be lengthy and complex, you can use the Memorandum of Trust. This document typically includes the name of the trust, the date it was established, the trustee's name, and the powers of the trustee, providing enough information to satisfy the third party’s requirements without overcomplicating the process.

Reducing Risk of Disputes

Using a Memorandum of Trust can also help reduce the risk of disputes or misunderstandings. When dealing with financial institutions, real estate transactions, or other third parties, providing clear and concise documentation helps ensure that everyone is on the same page. The Memorandum of Trust confirms the trustee’s authority and the existence of the trust, which can prevent potential conflicts and streamline transactions.

Compliance with Legal Requirements

In some states, providing a Memorandum of Trust may be a legal requirement for certain transactions. Even when not required, it can serve as a best practice compliance with financial institutions’ policies and legal standards. You can help make sure that your transactions are legally sound and proceed smoothly.

A Memorandum of Trust is a valuable tool for anyone managing a trust. If you’re considering setting up a trust or have already established one, consulting with an estate planning attorney can help you understand how a Memorandum of Trust can benefit your situation. 

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.