While trusts are sometimes called “will substitutes,” wills and trusts are legally distinct and serve different purposes. Understanding these differences is crucial, especially when it comes to the implications of losing these documents.
Wills: A Solo Endeavor
A will is a personal document where you specify your wishes regarding the distribution of your property after your death. It does not require the agreement of another party, meaning you can change it at any time without needing anyone’s permission. The most recent will is the one that holds legal authority, with some rare exceptions.
Trusts: A Triangular Relationship
In contrast to a will, a trust involves a triangular relationship between the settlor (the person who creates the trust), the trustee, and the beneficiaries. This relationship is more akin to a contract. If a contract is lost but not yet fully performed, its obligations remain in force, and simply creating a new document does not negate the original agreement. The situation is similar with trusts.
The Complexity of Trust Amendments
Almost all trust documents include a clause specifying how the trust can be amended or revoked if it is revocable. Sometimes, the document stipulates that the trust cannot be changed in any way other than as described in this clause. When you restate or amend a trust, your attorney needs to pay attention to the provisions in an earlier trust instrument. This is, of course, easy if you have this document.
Now let’s talk about the situation when nobody can find that old trust. Even if you or your family members remember the key provisions of the trust, failing to recall the section on amendments poses a significant problem. Unlike wills, where the most recent version supersedes previous ones, trusts do not operate this way. If the original trust document is later found and it turns out that the amendment process was not properly followed, the replacement trust can be legally challenged.
The Irrevocable Trust Dilemma
The situation becomes even more serious if the trust is set up to establish an irrevocable trust after the death of one spouse. An irrevocable trust cannot easily be altered by any subsequent document, even if it appears legitimate. Losing the original trust instrument in such cases can create substantial legal complications.
Where to look if you cannot find your old trust
Often times clients confuse a Certificate of Trust with a full Trust Agreement. The certificate only contains the absolutely necessary information for banks and other financial institutions, not enough to completely understand the trust arrangements. While banks may keep copies of such certificates, they are most of the time not particularly helpful.
- Home and Personal Belongings
- Safe Deposit Box: Check any safe deposit boxes at banks or other secure storage facilities.
- Home Safe: Look in personal safes or locked drawers at home.
- Filing Cabinets: Go through filing cabinets, especially ones designated for important documents.
- Common Storage Spots: Search common areas where important papers might be stored, such as home offices, desks, or bookshelves.
- Digital Storage and Online Accounts
- Email Accounts: Check your email inbox and sent items for any communications with your attorney or financial advisor that might include attachments or details about the trust.
- Cloud Storage: Look into cloud storage services like Google Drive, Dropbox, or OneDrive where the document might be stored digitally.
- Computer Files: Search your computer’s hard drive for any digital copies of the trust document.
- Professional Contacts
- Attorney: Contact the attorney who drafted the trust. They often keep copies of documents they create for their clients.
- Financial Advisor: Reach out to your financial advisor, as they might have a copy or have assisted in the creation of the trust.
- Accountant: Your accountant might have relevant documents or information on where the trust document is stored.
- Financial Institutions
- Banks: If your trust involves bank accounts or investments, the banks may have a copy or records indicating where the document might be.
- Investment Firms: Contact any investment firms managing assets that are part of the trust for possible copies or information.
- Family and Friends
- Spouse/Partner: Check with your spouse or partner who might have access to the document.
- Children or Relatives: Ask close family members if they have any knowledge of where the trust document might be stored.
- Executor/Trustee: Contact the executor or trustee named in the trust as they might have a copy or know its whereabouts.
- Legal and Estate Planning Services
- Trust Companies: If you used a trust company to set up the trust, they likely have a copy.
- Estate Planning Services: Companies that specialize in estate planning might keep records of the documents they assist in creating.
- Miscellaneous Places
- Former Residences: If you have moved, check with new homeowners or in storage from previous homes.
- Storage Units: If you rent a storage unit, make sure to check there for any important documents.
Steps to Take If the Document Cannot Be Found
- Document Your Search: Keep a detailed record of where you have searched and who you have contacted.
- Legal Advice: Consult with an estate planning attorney to understand the next steps and potential solutions, such as re-establishing the trust or taking legal action to declare the terms of the lost trust.
- Notify Interested Parties: Inform trustees, beneficiaries, and any relevant financial institutions about the missing document and seek their assistance.
When the Trust Document Is Irretrievably Lost
Losing a trust document can be alarming, but all is not lost. Under the rules of evidence, the existence and contents of a lost or destroyed document can be proven through other means.
Proving the Existence and Contents of a Lost Trust Document
When a trust document is lost or destroyed, the party relying on it can still establish its validity by following these steps:
- Prove the Loss or Destruction: The first step is to demonstrate that the document was indeed lost or destroyed. This can involve presenting evidence or testimony about the circumstances leading to the loss.
- Provide Alternative Evidence: Once the loss or destruction is proven, the contents of the trust can be established through other evidence. This often includes oral testimony from individuals who are familiar with the document’s contents.
- Convince the Court: The court must be convinced that the document was lost or destroyed and that the alternative evidence accurately reflects its contents. If the court is satisfied with the testimony and evidence presented, it will then assess whether the document complies with the Statute of Frauds.
The Statute of Frauds
The Statute of Frauds requires certain agreements, including trusts, to be in writing. However, if the original document is lost or destroyed, other evidence can be used to prove its existence and terms, ensuring the statute’s requirements are met.
Adequate Proof and Legal Considerations
As long as there is sufficient evidence to demonstrate the contents of the lost or destroyed document, its absence should not impact its legal standing. This evidence can include other related documents, corroborating the terms and conditions of the original trust.
Consistency with Contract Law
The approach to lost trust documents aligns with how lost documents are handled under the sections of the Statute of Frauds applicable to contracts. The use of oral testimony and other evidence to establish the terms of a lost or destroyed document is a well-accepted legal practice.
Practical Steps
If you find yourself in a situation where a trust document is irretrievably lost:
- Gather Witnesses: Identify individuals who can testify about the document’s contents.
- Collect Related Documents: Look for any related documents that can support the terms of the trust.
- Consult an Attorney: Seek legal advice to ensure you follow the correct procedures and effectively present your case in court.
By understanding these legal principles and taking appropriate steps, you can mitigate the impact of losing a trust document and uphold the integrity of your trust arrangement.
