How to sign as Trustee

[Thank_You]

What is the name of your state? New York

My parents have a revokable living trust that holds all of their assets. They are both grantor/trustees and I am also a trustee (3 trustees total). They are both very elderly, I am helping them more and more, and it seems to be approaching a juncture that was anticipated when they named me as trustee, that is they are still living but neither able to act as trustee.

So I am (reluctantly) preparing myself to step in and carry out that responsibility for them as the sole trustee. There are of course, lots of questions, and I will consult our attorney when the time comes. But this one seems pretty cut and dried so I thought I would ask it here.

I understand that when you are signing on behalf of the trust, for trust related business you want to distinguish yourself in that role from you as an individual at least in part to protect yourself from individual liability. One way that is accomplished is to sign things "Your Name, trustee." Clearly this applies to things like contracts that the trust may engage in. But should EVERYTHING you sign relating to your duties as a trustee be signed that way? For example, what about signing a check used to pay a household bill? Also, if you sign a check this way, will it be accepted by the bank? My inclination would be to sign everything that way since then you won't have to worry about distinguishing which things should and shoudn't be signed like that. But what is the best practice for this?

 

[LdiJ]

What is the name of your state? New York

My parents have a revokable living trust that holds all of their assets. They are both grantor/trustees and I am also a trustee (3 trustees total). They are both very elderly, I am helping them more and more, and it seems to be approaching a juncture that was anticipated when they named me as trustee, that is they are still living but neither able to act as trustee.

So I am (reluctantly) preparing myself to step in and carry out that responsibility for them as the sole trustee. There are of course, lots of questions, and I will consult our attorney when the time comes. But this one seems pretty cut and dried so I thought I would ask it here.

I understand that when you are signing on behalf of the trust, for trust related business you want to distinguish yourself in that role from you as an individual at least in part to protect yourself from individual liability. One way that is accomplished is to sign things "Your Name, trustee." Clearly this applies to things like contracts that the trust may engage in. But should EVERYTHING you sign relating to your duties as a trustee be signed that way? For example, what about signing a check used to pay a household bill? Also, if you sign a check this way, will it be accepted by the bank? My inclination would be to sign everything that way since then you won't have to worry about distinguishing which things should and shoudn't be signed like that. But what is the best practice for this?

Since the trust is revocable, has it actually been funded? Are all of their assets actually put into the trust and therefore all of the accounts names for all assets are the trust itself and not your parents individually? If so, then what you describe would be appropriate.

However, revocable trusts are often not actually funded until the person passes away, because the taxability of assets in a revocable trust remain with the individual. If the trust is not funded, then you would not have any signing rights on any of your parent's accounts unless they have given you a separate POA.

 

[Thank_You]

Interesting, thank you! Yes, all of their accounts are currently in the name of the trust and already funded. I am surprised to hear that it is common for a revocable trust not to be funded until after the grantors pass away. I always thought that any assets in accounts titled in their names as individuals, and not titled in the name of the trust, would be subject to probate when they pass away and therefore one of the main benefits of the trust lost.

 

[Zigner]

You're not the only one who is surprised
Yes, trusts are usually "funded" (assets transferred in to the trust) whilst the folks who created the trust are still alive. Perhaps LdiJ was speaking only to "money" (bank accounts) being titled in the name of the trust...

 

[LdiJ]

Interesting, thank you! Yes, all of their accounts are currently in the name of the trust and already funded. I am surprised to hear that it is common for a revocable trust not to be funded until after the grantors pass away. I always thought that any assets in accounts titled in their names as individuals, and not titled in the name of the trust, would be subject to probate when they pass away and therefore one of the main benefits of the trust lost.

I cannot tell you exactly how that part works, but I believe that it is written in the trust documentation what assets belong to the trust. I have tons of tax clients with revocable trusts that are not funded, and its never been a problem to not have it funded. It is also ok to fund the trust, it just becomes a little more complicated with the IRS. They start getting tax documents in the trust's name and then start looking for a tax return for the trust. Since everything should be handled on your parent's personal return, then you end up having to write letters of explanation to the IRS.

 

[LdiJ]

You're not the only one who is surprised
Yes, trusts are usually "funded" (assets transferred in to the trust) whilst the folks who created the trust are still alive. Perhaps LdiJ was speaking only to "money" (bank accounts) being titled in the name of the trust...

I was talking about all assets. As I said in my previous posts I have tons of clients with revocable trust that are not funded. Although, perhaps I am using the term "funded" in a different way than you think. I mean that the assets still remain in the name and SSN of the grantor. I am not saying that the trust does not lay claim to them in the trust documentation.

 

[Thank_You]

Maybe that is the function of a pour over will? It funds the trust upon the death of the grantor?

 

[Zigner]

I was talking about all assets. As I said in my previous posts I have tons of clients with revocable trust that are not funded. Although, perhaps I am using the term "funded" in a different way than you think. I mean that the assets still remain in the name and SSN of the grantor. I am not saying that the trust does not lay claim to them in the trust documentation.

If you are talking about real property, then it needs to be titled in the name of the trust, otherwise it will go through probate. Other assets that are titled may have to be titled in the name of the trust, depending on the nature of the asset.

 

[Zigner]

Maybe that is the function of a pour over will? It funds the trust upon the death of the grantor?

The function of the pour over will is to get anything that was missed in the trust into the trust. A pour over will still needs to be probated.

 

[Zigner]

LdiJ - I would suggest that you advise any of your clients who have not funded their trust to speak to a professional who knows about trusts.

For reference, do a Google search for the phrase "Does a revocable trust need to be funded prior to death?" and read a bit.

 

[LdiJ]

If you are talking about real property, then it needs to be titled in the name of the trust, otherwise it will go through probate. Other assets that are titled may have to be titled in the name of the trust, depending on the nature of the asset.

You may be right on the real property, or they may be using TOD's for the real property. Again, I have not personally gone through the process myself so I don't know the details of the process after someone dies. I just know whose SSN's are on the tax documents.

 

[Thank_You]

In our case, the trust document makes no mention of any specific assets as being part of the trust. We always thought it was critical to make sure all of my parents material assets were titled in the name of the trust, such as accounts at financial institutions, real property, etc. And so all of their assets are in such accounts, in the name of the trust, currently. Each of their accounts has their respective SSN on it for tax purposes and they file a joint income tax return in their individual names using those SSNs.

 

[Zigner]

You may be right on the real property, or they may be using TOD's for the real property. Again, I have not personally gone through the process myself so I don't know the details of the process after someone dies. I just know whose SSN's are on the tax documents.

That's because, frequently, the Tax ID # for trusts is that of the grantor.

 

[Thank_You]

I'd still like to get some confirmation and clarity around the original question I posed. Should I sign EVERYTHING that I sign on behalf of the trust, including checks, as "My signature, trustee?"

 

[Zigner]

Is the checking account in the name of the trust? If not, then you really can't sign the checks without a power of attorney from your folks.