Question: Do I have to file the Trust with the Secretary of State for it to be immediately protected or effective?
Answer: A living revocable trust is not recorded to make it “valid,” “legal,” or “effective” in any way. Once the trust is properly signed, it will be effective. Of course, its effectiveness in avoiding probate depends upon your proper care and feeding of the trust.
The secretary of state is the usual place where corporate, LLC and limited partnership documents are filed. The trust is never filed there in the sense that the business documents are filed.
The beauty of the trust is its privacy. It isn’t even filed when property is passed following a death – most of the time.
You have to remember that your trust is not secret. It may not be public, but it’s not secret. Your banker and broker may want a copy of the trust on file. Usually, they only want a summery of the trust, or they may take a copy of the first and last page of the trust and the pages that deal with successor trustees and the trustee’s powers.
In my book, Protecting Your Financial Future, I give a relatively humorous story about the banker and Uncle Big Bucks. It will give you the nuts and bolts of dealing with the bankers.
Others need to know who they will be dealing with after you are no longer the trustee. They need to know that the successor trustee that shows up has a copy of the trust they agreed to honor. They need to know what the trustee can and can’t do. But, they do not need to know how you are going to divide up your property amongst the heirs.
Parts of the trust may be filed publicly when a piece of real property is transferred out of the trust. The chain of title has to be clean, so the title office needs to know that the trustee had the authority to sign on behalf of the trust. Here again, the more “private parts” of the trust shouldn’t be recorded.
Sign the trust properly and then keep a copy in the file cabinet. Another copy should be at the attorney’s office or someplace else so that if your file cabinet copy is destroyed you can have another originally signed copy.
If you lose all of the originally signed copies of the trust, you are in DEEP trouble.