Learn How a UAD Designation Can Properly Identify a Trust

What does UAD mean in a Trust?

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The term “UAD” is typically used in connection with a living trust. It stands for “under agreement dated” and it appears in most trust instruments—their formation documents—to establish the type of living trust that has been formed. Financial and other institutions rely upon UAD designations for tax and other purposes when they're dealing with a trusted entity.

Revocable Vs. Irrevocable Living Trusts 

First, it helps to understand the significant differences between the two types of living trusts.

A revocable trust is one that can be changed at any time by the grantor—the individual who formed it. Quite often, the grantor serves as the trustee of his revocable trust. He retains control of the assets he’s funded or placed into the trust and he reserves the right to change the trust's terms at any time as long as he's mentally sound and still living. He can revoke or dissolve the trust and take his property back if he decides it no longer suits his purposes.

Contrast this with an irrevocable trust which requires that the grantor step aside after he has formed and funded it. Someone else, either an individual or a financial institution, serves as trustee. The grantor cannot take his property back—he relinquishes it forever when he transfers it into the trust's ownership. He can’t revoke the trust or change any of its terms after he's formed it. Why would anyone choose such a trust? Irrevocable trusts offer many tax and asset protection benefits that revocable trusts don’t share, although both avoid probate.

“UAD” Identifies an Irrevocable Trust

When the term “UAD” or sometimes “U/A” appears in a trust instrument, this designates that the trust is an irrevocable trust. It translates to “trust under agreement dated” or “trust under agreement.” It indicates that the grantor and the trustee are two separate individuals and that the trustee controls the assets that have been placed in the trust.

The trust instrument might read, “John Doe, Trustee of the Jane Doe Living Trust UAD 02/17/2017.” This tells a financial institution or other entity four things: 

  • John is the trustee.
  • Jane is the grantor.
  • Jane does not control the trust.
  • The trust was formed by an instrument dated February 17, 2017

UAD Vs. UDT Designations 

When the term “U/D/T” or “UDT” appears in an instrument, it means just the opposite. It stands for “under declaration of trust" and this indicates that the grantor and the trustee are the same person. The grantor maintains control over the assets he has placed into the trust, and he can only do this if the trust is revocable.

A Word About Testamentary Trusts

A testamentary trust is something entirely different. These trusts are created after the grantor has died, not during his lifetime the way a living trust is. Its terms and beneficiaries are based on instructions contained in the decedent's will. By definition, a testamentary trust always carries a UAD designation. The grantor and the trustee must be two separate individuals because the grantor is deceased by the time the trust is formed. 

NOTE: The information contained in this article is not intended as legal advice and it is not a substitute for legal advice.

If you’re considering forming a trust, please consult with an estate planning attorney who can advise you regarding the pros and cons of different types of trusts and how they might meet your needs.

Alternate Spellings: UAD, U/A/D, uad, u/a/d