A customer would like to set up a CD titled as the "Mary Doe RLT, dated 6-1-02" and include 2 joint signers so that 2 signatures are required for withdrawal. I have many concerns about this, the primary one being: is it legal? Or - does the trust document have to specify "joint signers" or "joint owners"? To me, joint ownership (as our bank defines it) means that all parties have rights of withdrawal. I can better understand "authorized signers" especially if these additional people are the trustees. Not being familiar with this, I'm not sure how to advise the branch. Thanks!

Review the trust document carefully. If co-trustees are named, and the language of the trust requires that they must jointly participate in all business, then you have co-trustees and two signatures required for all transactions.

If there are co-trustees and the trust is silent on whether they must jointly act, you should assume they must jointly act.

If there are co-trustees and the trust says they may act independently of one another, and if the co-trustees are the people named as signers on your account, you should resist any attempt to have the bank require two signatures only because of the administrative problems involved.

Finally, if there is one trustee named and the trust allows the trustee to name an agent, you should list the agent only as an authorized signer and you should resist (for reason above) attempts to have two signer requirement.

Most importantly, if you have a complicated or unfamiliar trust situation, you are strongly advised to discuss the trust and the account with counsel familiar with the trust rules in your state, and only accept the account after counsel has opined.

Thank you! It continues to amaze me that trust documents are so specific and particular, and that one bank will choose to interpret them differently from another bank (if they're reviewed at all).

The trust reads: "The Trustee is Mary Doe. The SUCCESSOR TRUSTEES are Jane Doe and John Doe....Trustee and any Successor Trustee shall have all the powers I would have in handling my own affairs and all of the statutory and common law powers of a trustee, all exercisable solely in Trustee's discretion without approval of any court or beneficiary."

In your reply, you specifically said "Co-Trustees" - what's your opinion on "Successor Trustees"? My understanding was that a successor would only serve if the Trustee cannot or would not serve.

Joint ownership between the trust and whoever else the trust wants as joint owner(s) is the way to go. The other joint owner could be a successor trustee or anyone else on the planet. Designating others as "authorized signers" would likely be a no-no as a trustee cannot delegate its authority to others. Since the trust can do whatever the beneficiary could do alone, establishing a joint account fits the list of things the trust/trustee can do.

Most attorneys versed in the nuances of trust law in fact recommend just what was requested of you. Lesser attorneys either give no advice or violate the trust by naming "authorized singers."

I'm not an attorney, but I'm going to respectfully disagree here. But I preface my comments by acknowledging that trust specifics truly vary from state to state, since so much of trust law has its genesis in common law. I repeat my suggestion that you review the trust at hand with a competent attorney.

First, I don't believe we can make a sweeping statement that the trustee can do anything the beneficiary can do. The trustee is bound to the limits imposed by the trustor and the law of the jurisdiction. Many beneficiaries are minors and have no authority to do anything.

Second, I don't accept the concept of setting up an account owned jointly by the trust and another party. The trustee in any trust I've reviewed would not have the right to set up such an account, since to do so would put at risk the assets in the trust, placing them outside the trustee's exclusive control.

Third: in response to an earlier question, the trustee may, in some cases, have the authority to appoint an agent to act in the stead of the trustee, if that authority is specifically given by the trustor. This is sometimes the case in business trusts or real estate trusts. In that case, the agent could be named as an authorized signer on the trust's account.

Fourth: successor trustees, even if named in the trust document, have no authority to act (or sign on an account) until they assume the trustee's place. This can take place on the occurrence of a specific event (a triggering event) listed in the document, upon resignation of the trustee, or (if not named in the document), appointment by and resignation of the trustee.

I would allow Mary Doe as the only signer on the trust. If she cannot or does not want to serve as trustee, the successor trustees should have documentation supporting that fact. As John explained, the trust should document whether the co-trustees may act solely or jointly. I am not aware of any authority we would have to deviate in any way from the trust directives.

Thank you all for your input! We've come to the same conclusion, that the successors have no authority, and will set it up (if the customer agrees) with Mary as the sole signer. The other bank that set up the first account has also agreed that they set up their account incorrectly! I love this website!!

Policies regarding accounts owned by trusts and loans to trusts should be reviewed by legal counsel in your state. There is a split of opinion between attorneys as to whether a trust is a legal entity or not, and whether the trust or the trustee technically owns the property.

Howard--

As I recall the attorneys on the side that the argument that the trust does not own the property is pretty self (client)-serving. As far as a successor trustee is concerned, the bank needs to be very, very, very sure that the trustee has stepped down before letting a successor trustee act.

Thanks - since we both are in Michigan, are you familiar with the definition of a "trust" as it relates to your response? I know I've seen situations where a trust can "do" things as an entity, but I wasn't sure how that applied here. Since the branch has only received the "Affidavit/Certificate of Trust Existence" and not the entire trust, it's possible there is more information within the document. It just seemed unusual to me that the document wouldn't specifically state that the successor trustee would only serve if/when the trustee can't or won't.

I can speak from experience regarding "successor trustees". I am currently serving as Successor Trustee on a trust set up as a Revocable Living Trust by my in-laws about 10 years ago. When my mother-in-law, who at the time was the surviving Grantor of the trust, went to a nursing home, she resigned in writing as Trustee and designated me as Successor Trustee. I also had to accept the postion of Successor Trustee in writing. This procedure was covered in the trust documents. Even though the trust documents named me as Successor Trustee, I had no authority to act until my mother-in-law resigned. So, be sure to have someone review the trust papers to determine who has authority to do what. And, yes, the trust in this case is a separate entity. Both my father-in-law and mother-in-law have passed away, but the trust that they established continues to exist.