(Formerly Standard 29)
PGTS Standard
48. Appropriate documentary evidence is obtained whenever assets of revocable trusts are returned to the trustor(s). This means that the beneficiary signs a separate receipt or signs an acknowledgment above the distributee’s endorsement on the check. Such receipt or acknowledgment shall verify that the asset was withdrawn from the trust by the beneficiary in harmony with the trust document. Any other method shall be approved in writing by the entity’s local legal counsel. [PGTS]
Returning Assets
Standard #19 requires your organization to issue a receipt to the trustor when an asset is placed into a revocable trust. If at some time in the future the trustor removes the asset from the trust a receipt or acknowledgment signed by the trustor must be placed into the file documenting that the asset was returned to the trustor at their direction and in accordance with the terms of the trust.
If the return of the asset to the trustor is in the form of a check then an endorsement on the back of the check may be used. Mailing the return by the U.S. Postal Service certified, and keeping the signed return receipt, will document your attempt to obtain the receipt or acknowledgment. Your local legal counsel should be consulted to advise the best way to comply with the local and state laws.
Refinanced Property
If your organization assists trustors of revocable trusts to place real estate into their trust you may come across those who chose to refinance their property. Many banks require the real estate to be titled in the trustor’s name in order to refinance the property. In this example, the trustor must sign a receipt or acknowledgment when the real estate is removed from the trust and retitled into the name of the trustor.
When a trustor removes the real property from a revocable trust with the intention of quickly returning the property to the trust, as in the example above to refinance their property, you may want to have the trustor sign the instructions to the trustee to place the property back into the trust, the deed, and the receipts when they sign the instruction to the trustee to remove the asset from the Trust. Then your office may hold the deed in the file until the trustor notifies you that the refinance process is complete, and the real property can be put back into the trust. This process not only makes it more convenient for the trustor as well as efficient for your office but also safeguards against an asset being left out of a trust if something were to happen to the trustor while the property is out of the trust for refinancing. This process would need to be approved by local legal counsel.