Memorandum of Trust and How It Simplifies Estate Plans

Living Trust Documents

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One significant advantage of forming a revocable living trust is the privacy it affords, and a memorandum of trust helps preserve this privacy.

Living trusts avoid probate. The extent of what you own and who you're leaving the property to at your death does not become a matter of public record as a last will and testament does when it's presented to the court for probate. An affidavit of trust or memorandum of trust helps to keep your personal business just that—personal—during your lifetime as you fund your trust as its trustmaker or grantor.

Funding a Revocable Living Trust 

Funding a revocable living trust involves moving ownership of your assets from your individual name into that of your name as trustee. You are a component of your trust as its trustee, so you no longer personally own the property. This is the mechanism by which revocable living trusts avoid probate.

Using an Affidavit or Memorandum of Trust 

When you approach a financial institution to direct that ownership of an asset held by you should be transferred into the trust—and to you as trustee—the institution will almost certainly want a copy of the trust agreement for its files. You may not want to hand over a copy of your trust agreement and leave it on record with the institution because it details all your assets and property and who it will eventually transfer to at your death. 

You can keep these provisions of your revocable living trust private by asking your attorney to prepare a short affidavit of trust or memorandum of trust instead. This document will contain the abbreviated information that, in most cases, is all a financial institution really needs to know. 

Most affidavits or memorandums of trust include just the basics: 

  • Who created the trust and when
  • The name to be used for the trust
  • The fact that the trust is revocable and can be changed at any time
  • Who is named to serve as the initial trustee or trustees
  • Who is named to serve as the successor trustee or trustees to take over when the initial trustee dies or becomes incapacitated
  • What powers the trustee can exercise over the trust assets, and
  • Who signed the trust agreement

Other Privacy Issues 

You may also want to fund your trust with real estate such as your home. This will require preparing and recording a new deed transferring ownership from yourself as an individual to yourself as trustee. Your state or county might also request a copy of your trust agreement for this purpose. 

The affidavit or memorandum may also be recorded in place of your entire trust agreement in the public records of states or counties that require trust documents to be recorded along with the deeds that transfer the property. 

State and local laws change frequently, and the above information may not reflect the most recent changes. Please consult with an attorney for current legal advice. The information contained in this article is not legal advice and is not a substitute for legal advice.