As general counsel for many credit unions, among the most common inquiry I address relates to the law of trusts. Trusts law is a complex area of the law and for those credit unions navigating these waters, the potential for significant legal exposure can result through errors in interpretation of the law or acting inconsistently with certain trust provisions.
Fortunately for credit unions in most states, states' adoption of the Uniform Trust Code (UTC) has simplified the area of trust law for financial institutions. No longer do you need to obtain and review significant trust documents. In fact, your credit union should not accept a full trust document when opening trust accounts and providing loans to trusts. Instead, credit unions can and should rely upon a certification of trust; a significantly redacted and more easily interpreted document highlighting key trust terms. In fact, a properly drafted certification of trust can easily fit into one or two pages. The benefit to accepting a certification of trust, in lieu of an entire trust document, is that anyone who, in good faith, accepts a certification of trust can rely upon that certification and shall not be liable for otherwise conflicting facts in the trust.
In order to accept a certification of trust, it must contain the following terms: