Living Trust Memorandums and Letters of Wishes

Trust memorandum – Transferring assets into a living trust involves several steps. Documents related to assets must be collected and organized, deeds transferred for real estate properties, and new financial accounts opened under the name of the trust.

Sometimes it may be possible to keep the information contained within your trust private by creating an affidavit or memorandum instead of a full trust certificate.

What is a Memorandum of Trust?

A memorandum of trust (sometimes referred to as a certificate of trust or abstract) is an abbreviated version of your full trust document that provides financial institutions with all of the information they require while still protecting your privacy by not disclosing details about beneficiaries and properties owned by it.

When banks, lenders, or other institutions need to verify your trust’s existence, they will require to see its Memorandum of Trust as proof. It serves as an executive summary of your entire trust document by outlining key terms while providing essential details about who your trustees are, what their responsibilities are, and whether or not they are authorized to carry out transactions requested by the trust.

Memoranda of trust can also be used for personal property such as jewelry you want to give your daughter or heirlooms that need to be left to someone after you die, such as an estate plan heirloom. We can include one in your estate plan so these items are properly transferred. Similarly, we may prepare one that documents any health care preferences such as any services or support that should be received during life – these instructions do not have legal ramifications and any changes need to be documented through an amendment to your trust document.

What is a Memorandum of Intent?

Memoranda of Intent (MOU), often referred to as Letters of Intent (LOIs), are documents which outline the terms on which two parties agree prior to entering into formal contracts or legally binding documents. They can serve as precursors or stand alone agreements.

While each MOU/LOI depends on its particular circumstances, some standard elements should always be present:

Identification of Parties The initial paragraph should clearly identify all parties involved in the MOU/LOI, including full legal names and contact details of all involved. Furthermore, this paragraph should outline an intention between all involved to form an official relationship.

Outlining the Purpose and Scope of an MOU/LOI

The next section should outline the purpose and scope of an MOU/LOI, with details regarding project definition and any key goals or expectations of both parties involved. Furthermore, it’s crucial that roles and responsibilities for each party involved are clarified here.

Even though an MOU/LOI is usually nonbinding, its details must still be carefully reviewed by attorneys before signing. Terminating negotiations that were once considered binding could result in liability for precontractual promises (commonly known as “precontractual liability”). Therefore, it is vital to examine an MOU/LOI thoroughly before finalizing it as a contract.

What is a Memorandum of Wishes?

Letter of Wishes are non-binding documents that accompany Wills or Trust deeds that offer guidance to executors and trustees on how they should exercise their discretion when administering your trust following your death. They can provide clarity for executors/trustees as they administer trust terms after your passing and can explain any personal motivation behind certain choices while providing comfort to family during what can often be an emotionally trying time.

Where your Trust contains significant elements of discretion (i.e. where there are discretionary beneficiaries and wide powers for distribution among them), it’s particularly helpful if your executors and trustees understand your intentions, so they can fulfil them after your death.

While trustees are not legally obliged to adhere to a letter of wishes, it should still be taken into consideration and usually adhered to. A letter can be created either independently by the settlor or with assistance from their solicitor.

At NRG, our expert private client team can assist in writing a letter of wishes for any occasion and guide you through all issues to keep in mind when writing one. We take an individual approach when creating our rough draft that can then become part of a formal letter of wishes document for you.

What is a Trust Agreement?

An individual or institution can use a trust agreement to set out specific terms and conditions of their trust relationship. These may include how assets should be managed, who they can be transferred to and what will happen after its creator passes or becomes incapacitated. Trust agreements are used for multiple reasons including protecting assets from creditors, transferring property between individuals and companies and reducing estate taxes.

For any trust to function effectively, it must be properly funded. This requires taking steps by the individual who established the trust to reassign title ownership on assets that will be included into it from their name into that of the trust itself and carry out all trustee responsibilities personally.

A trust document must contain the following details:

  • Power to sell clause
  • Borrower, lender, and trustee identities
  • Property to be placed in trust full description
  • Property in trust use restrictions or requirements
  • Loan terms – (Principal, Monthly Payments, and Interest Rate)
  • Repayment terms – (Late Fees and Penalties)