Orange County Estate Planning Lawyer Blog
By: David L. Crockett, Attorney, CPA
UCLA Law School ’69, UC Berkeley ’66
Newport Beach, Ca 949-851-1771
www.trustandprobatelawyerst.com
david@clcnewport.com
HOW TO SELECT A NAME FOR YOUR TRUST
Creation of trusts.
Laws stating the requirements for forming a trust are stated at California Probate Code §§15200 through 15312. A trust is created by a written document known as a declaration of trust which is signed by the “Trustor”, sometimes known as the “Trust Creator” and a transfer of property or money to a “Trustee”. Probate Code §15200. A trust also must designate a “Beneficiary”. Probate Code §15205.
No law describes how a trust is to be named.
There are no laws about the naming of your trust as with other legal entities such as corporations, limited liability companies and limited partnerships. Since a trust is not registered with the state or with the federal government or the IRS, there is no government official or government regulations that have to approve of the name of your trust. Thus, the Trust Creator is able to select any name that he or she wants to use.
Typical trust naming.
Most trusts are named after the Trust Creators and also include the date the trust was created. Examples are “John and Jane Smith Revocable Trust dated 1/1/20”; or “Smith Family Trust dated 1/1/20”; or “John W. Smith and Jane A. Smith Revocable Family Trust dated 1/1/20”. Also, the name of the trust and the names of the trustees will appear on trust checks and bank statements and real es-tate deeds. Thus for example, “John Smith and Jane Smith, trustees of the Smith Family Trust dated 1/1/2020”. The exact name of the trust should be stated on the first page of the Declaration of Trust creating the trust, preferably as a separate paragraph. For example, such a paragraph would state, “The name of this trust is the Smith Family Trust dated 1/1/2020”. Banks and real estate title insurance companies in particular will need to know the name of the trust so that legal documents, such as a contract for selling a trust property. The exact name will be used on legal documents so there must not be any confusion about the trust name. Partially because there is no state registration of the trust name, the only way a bank or title insurance company can determine the trust name in order to be sure trust contracts are legal and enforceable, is to see the declaration of trust creating the trust. I have found that older trusts typically from 20 to 30 years ago, don’t always specify a trust name which can lead to problems verifying the validity of older deeds and contracts. This may sound like needless picking into details but because trust contracts and deeds usually involve hundreds of thousands of dollars, these details do matter. The exact name of the trust is as important as the exact numbers of a bank account.
Practical suggestions.
1. The shorter the name the easier it is to deal with. Thus, “Smith Family Trust dated 1/1/20” is preferable to “John W, Smith and Jane A. Smith Revocable Family Trust dated 1/1/20.” Longer names in-crease the chances of misspelling and often will necessitate some abbreviation where there is not enough space on a printed bank or real estate form.
2. If confidentiality as to who owns the trust is an objective, you could select a trust name that does not include the names of the Trust Creators or anyone associated with the trust. I once had a client who named his trust after his dog.
3. If you choose a trust name which has nothing to do with your family name, there will be more questions from various sources when you transact business for the trust. For example, banks or others will want documentation to prove that you are authorized to conduct business on behalf of your trust. Unlike a corporation which must register its name and its officers (authorized signers) with the CA secretary of state, there is no state registration to prove or backup the persons claiming to be the authorized signers (trustees) of the trust.
4. Sometimes if a trust is for a particular purpose, such as the owning and operating of an apartment building, the trust name used is the street address. An example would be “2000 South Main Street Trust dated 1/1/2000”. This is a practical way to keep the apartment business separate.
5. You must be precise about spelling of names and use actual legal names. Surprisingly, I have found that many people disregard parts of their names such as “Jr.” or “III”. I once had a serious case where-by the legal ownership of a property was not recognized because when the Trust Creator established the trust he didn’t tell the attorney preparing the trust that he was a “Jr.” because he never used the term. His father was long since gone and he didn’t see any sense in using “Jr.” as part of his name. Thus, he formed the trust without his full name, calling it the “John Smith Trust dated 1/1/05” and deeded his house into the trust as follows, “John Smith, as trustee of the John Smith Trust dated 1/1/05”. When he died his daughter became the trustee. When she was dealing with legal matters on the house, she provided a death certificate showing her father as “John Smith, Jr.”. Since John Smith, Jr. was not the name on the deed transferring the house into the trust, the ownership of the house was questioned. The title company involved wanted to know what happened to John Smith, Sr. This dispute is still pending and it is preventing the house from being sold. The ultimate solution is to file a court petition to prove to a Judge that the signature of John Smith on the deed is actually the signature of John Smith, Jr. Unfortunately, a court petition can take up to a year to get through the court system and cost many thousands of dollars in legal fees and court costs.
6. Before actually signing the declaration of trust, check the name spelling on your (i) driver’s license; (ii) your birth certificate; (iii) your military records, (iv) your social security card, and (v) on the deed to your house. Ideally, all 3 should match but often there are differences. If there are differences, then it must all be explained in the declaration of trust to avoid future confusion. Thus, in the above example of John Smith, Jr., the proper designation in the declaration of trust would have been, “John Smith, Jr., also known as John Smith”. Another example would be “John Alexander Smith, Jr., also known as John Smith, also known as John Smith, Jr., also known as “John A. Smith”.
CONCLUSION.
When it comes to trust names and the names of the Trustors, Trustees and Beneficiaries, names do matter a great deal. Any misdesignation or mistake can cause needless problems and delays with (i) trust money and property handling; (ii) notary acknowledgments of trust documents; (iii) court procedures if the trust is unfortunate enough to have to go to court; and (iv) with ultimate distribution of the trust to Beneficiaries.
