Revocable Trust Documentation
Answer by Ken Golliher, BOL Guru Guru Bio
Question: We have a customer who wants to title her shares of our bank stock in this manner:Sue Smith revocable trust, Sue Smith trustee. Then the name of her son below that. SHE DOES NOT HAVE A TRUST ACCOUNT OF ANY SORT IN EXISTENCE. I understand a revocable trust does NOT need to be supported by a written agreement, just make sure it is titled correctly according to state law. Does this customer need to set up a trust before we can title the shares the way she is asking us to?
Answer: Your question deals with the responsibilities of a transfer agent for stock, not those of a depositary bank. Transfer agents are generally responsible only for following the instructions of transferor, not assuring the legal existence of the transferee.
In the states where I do seminars on deposit administration the concept of a "revocable trust" which is not supported by a written agreement is only applicable to bank accounts - it simply will not work on any other sort of asset. It is highly likely that it would not work in your state either.
Your inclinations are correct, if your customer has the stock retitled in the name of an entity that does not exist she guarantees that her heirs will have significant legal problems upon her death. However, you are not in a position to refuse to follow her instructions. Encourage her to seek advice from an attorney.
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