March 7, 2013

Naming a Trust

A common question I hear is, "what name should I give my trust?" Arguably there is no limitation as to what a person could name their trust. For example, a person could name their trust the Shakespeare Family Trust even if the person was not named Shakespeare but merely loved Hamlet, Othello and King Lear so much that he had to name their trust in Bill Shakespeare's honor. 

However, a prudent person would adhere to the following principles when naming their trust. The reason to abide by these principles is for trust funding purposes. A trust only governs assets that are subject to its control, i.e. assets that have been titled in the name of the trust. Thus, having a sensible name ensures that the trust funder understands exactly how to title the asset, e.g. on the deed, on the bank account, on the brokerage account, etc.

The 3 main components that a trust name should have is (1) the name of the current trustee (2) the actual trust's name and (3) the date the trust was signed.  For instance, assume Theo Wilshere wants to write a trust in 2013 and is pondering a name. Theo would be best served to name his trust as follows, "Theo Wilshere, trustee of the Wilshere 2013 Revocable Trust, dated March 7, 2013."

It should be noted that the trustee is the technically the legal owner of the property, so the trustee's name should always be apparent. Also, it is not required to insert the year in which the trust was written. Still, I like to include the year in the title because sometimes the date the trust was signed, e.g. 3/7/2013, is omitted on certain statements due to a lack of room.  This provides the reader with a reference point as to when the trust was executed.

Another component which is optional in California is the inclusion of the term "revocable" in the trust's title. California is unlike other states in that a trust is presumed revocable unless specified otherwise. Prob C § 15400. That is, if a trust says Smith 2013 Trust it is presumed to be revocable instead of irrevocable. Regardless, it is better to include the term "revocable" in the title to erase all doubt. Many people who ultimately read the trust are not lawyers so it is doubtful that they are aware of California's law on revocability, Prob C § 15400.

As for the trust's name, the practice I think is most prudent is the use of simply the last name and not the full name, e.g. "Wilshere 2013 Revocable Trust" not "Theo Wilshere 2013 Revocable Trust." I prefer this method because inclusion of first name can make the trust needlessly long. This is especially true for couples. I doubt a person wants to write their first and last name, besides their spouse' first and last name, each time they sign on behalf of the trust.

Finally, it is important to include the date the trust was signed. This allows the reader to know at what stage in life the settlor executed a trust. For instance, if the person was feeling ill when the trust was signed, this can serve as evidence that the settlor was not competent when the trust was signed. Also, including the date can distinguish one trust from another. This is important for clients with common last names such as Jones, Smith, Chang, Gonzalez, Brown, Davis, Kim, Lee, Garcia, etc.