As a part of their estate plan, Jim and Mandy decided to create a trust for their home and certain accounts they wanted to set aside for their children. Then Jim wondered whether the trust would be a public record.
The central governing document for a trust is the Trust Agreement. The Trust Agreement functions similarly to a contract. They typically are not public records, so their terms – and the trust holdings — usually would be private.
There are some situations where certain aspects would be evident from the public record, however. For example, the transfer of real estate into or out of a trust occurs by recording a deed. The same procedure applies to other types of real estate sales and transfers. And at closing, the trustee may be required to certify that the trust still is in existence.
Similarly, a bank or financial institution may require certain documentation to establish the genuineness of the trust before opening a new account or re-titling existing accounts.
As a general matter, however, the terms governing the trust are intended to be private. This is a stark contrast to the nature of a probate proceeding, which may be necessary when someone dies without having established a trust, and relies instead on a will alone – or has no will at all. In such cases, the filings made in the probate case will be accessible as court records.
The privacy of a trust is one aspect that makes them popular. Their ability to avoid probate proceedings for the assets they hold is another, as is the continuity, stability, and security they can provide.
The trust that Jim and Mandy chose had these features. When they learned this, they realized that their trust could become very beneficial to their family over time.
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