Does A Trust Have to Be Registered With The State?
If you’re a person who is familiar with the dealings of corporations, LLCs, or limited partnerships, then you might be inclined to think that trusts, a similar agglomeration of wealth, would be held to the same standards and be required to register with the State. While this holds true in some states, like Alaska and Hawaii, it is generally not the case. In fact, even in most states where registering a trust is required, there are often no legal consequences if you don’t. The most stringent trust registering laws are found in those few states that have adopted the Uniform Probate Code, which still only imposes minor penalties on the trustee for failing to register, and does not invalidate an unregistered trust.
What States Allow for the Registration of Trusts?
There are only ten states with provisions for registering trusts, and they are Alaska, Hawaii, Michigan, Nebraska, Colorado, Idaho, Missouri, North Dakota, Florida, and Maine. Even with these provisions in place, registering a trust is not mandatory in Nebraska, Florida, or Maine. While Colorado initially does not require the registration of a trust, it does once the grantor of the trust passes away; however, if all of the trust’s property is distributed to the beneficiaries upon his death, then registration is still not required. As mentioned before, if you do live in one of these states where registering a trust is mandatory and fail to do so, expect to be penalized if you’re the trustee. If you are confused about the State law under which you live, do not worry – the trust instrument itself usually indicates the State under which it is being organized.
What Does Registering a Trust Do?
All registering a trust does is give the court jurisdiction over any disputes involving the trust. It does not, however, give the court power over the trust’s administration, except in the event of a dispute. These procedures are exactly the same even if you do not register the trust, as the same court would still have jurisdiction if someone, like an upset relative or creditor, filed suit.
How Do I Register A Trust?
The trustee must file a statement with the court where he resides or where he keeps the trust records in order to register the trust. His statement must include his name and address, the trust document’s date, the grantor’s name, the original trustee’s name, and an acknowledgment of his trusteeship. It should be noted that a trust is to be registered only in one state at a time.
Should I Register My Trust?
There is currently no legal consensus on whether a trust should be registered in states where it is not mandatory. Some argue that the registration of trusts, especially big ones, can be so costly and complicated that it becomes fiscally impractical. Others argue that registering a trust should be a precondition for its existence, so as to add greater transparency to who owns certain assets. It is truly a question that can only be answered on a case-by-case basis with a well-trained, experienced lawyer, so make sure to find one who can properly guide you through the complexities of estate planning, and who can ensure that your trust will be in the best shape it can possibly be.