Understanding Certificates of Trust in Michigan: What They Are, Why They Matter, and How to Use Them

A Certificate of Trust is a vital legal document in estate planning and trust administration. In Michigan, this certificate serves as a concise, legally recognized summary of a trust's key provisions, allowing trustees to conduct business with financial institutions, title companies, and other third parties without disclosing the full trust agreement.

What Is a Certificate of Trust?

A Certificate of Trust is a document that verifies the existence of a trust and confirms a trustee's authority to act on behalf of the trust. It typically includes essential information such as:

1. The name and date of the trust

2. The name(s) of the current trustee(s)

3.  The powers of the trustee

4. The revocability or irrevocability of the trust

5. The authority to transfer or convey real property (if applicable)

6. The identity of the successor trustee upon death or incapacity of the original settlor(s)/grantor(s).

Importantly, it does not include the dispositive terms of the trust, such as specific beneficiaries or asset distributions, thus maintaining privacy.

Legal Authority Under Michigan Law

Michigan law recognizes the Certificate of Trust and provides statutory backing for its use. Under MCL 700.7913 of the Michigan Estates and Protected Individuals Code (EPIC), a third partyies, such as a bank, is required to accept a Certificate of Trust as sufficient proof of a trustee's authority. The statute protects institutions from liability if they rely on a Certificate in good faith, provided the document appears valid and complete on its face. Specifically, MCL 700.7913(4) states:

"A person who acts in reliance on a certificate of trust without knowledge that the representations contained in it are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certificate."

When a Certificate of Trust Is Needed

A Certificate of Trust becomes especially important during transitions of trust management, namely, after the incapacity or death of the settlor/grantor or original trustee. In these instances, a successor trustee must be able to step in quickly and prove their authority to handle trust affairs. Banks, investment firms, and title companies will typically request documentation before granting access to accounts or transferring assets. Producing a properly executed Certificate of Trust can eliminate delays and reduce complications.

Technical Requirements for a Valid Certificate of Trust

To be effective under Michigan law, a Certificate of Trust must include:

A statement that the trust exists and the date it was executed

1. The identity of the settlor(s) and the current trustee(s)

2. A statement that the trust has not been revoked or amended in any way that would make the certificate incorrect

3.  A description of the trustee's powers relating to the transaction at hand

4. The legal description of real property if real estate is involved

5.  Whether the trust is revocable or irrevocable

6. Signatures of the acting trustee(s), often notarized

A financial institution or third party is not entitled to request the entire trust instrument if a valid Certificate of Trust is presented.

Don't Delay: Planning and Drafting Matters

Many trust instruments include a clause requiring the successor trustee to accept their role within a specific period after the settlor/grantor's s death or incapacity, sometimes within just a few weeks. To avoid delays in administering the trust and accessing necessary assets, it is critical to have a valid, up-to-date Certificate of Trust ready, or be prepared to draft one quickly.

Final Thoughts

If you are a successor trustee, it is wise to consult with an experienced estate planning attorney to ensure that your Certificate of Trust is valid, comprehensive, and compliant with Michigan law. A properly drafted certificate can prevent costly delays and allow you to carry out your duties confidently and efficiently.

At Wood, Kull, we help clients throughout Michigan navigate the complexities of trust administration. Contact us today to prepare or review your Certificate of Trust and ensure your estate plan is ready for the road ahead.