IBA Compliance Connection

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We have a savings account held by a trust. The sole trustee of the trust has a daughter, who recently told us that the trustee is incapacitated, that she is successor trustee and that she wants to take over the trust. We reviewed the trust agreement, which is unclear. We interpret the trust agreement to require the father to resign as trustee before the daughter can take over. What documentation should we obtain from the daughter? Do we need proof of the trustee’s incapacitation or proof of his resignation?

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In our view, you do not need to obtain proof of the existing trustee’s incapacitation or resignation, but you should request a Certification of Trust form from the daughter.

We emphasize that your bank should not attempt to interpret trust instruments, which as you point out, can be unclear. Under Illinois law, you may request a Certification of Trust form in lieu of an entire trust instrument. When acting in good faith and without contrary knowledge, your bank may rely on the Certification of Trust form without concern for liability.

If the Certification of Trust form identifies the daughter as the trustee, your bank is not required to verify that the daughter followed the trust agreement’s requirements for assuming her role. As the trustee, she controls the trust, and your institution may follow her directives regarding the trust funds. If she breaches her fiduciary duties regarding the trust, then she faces liability from the settlor or other beneficiaries, rather than your bank.

For resources related to our guidance, please see:

  • Trusts and Trustees Act, 760 ILCS 5/8.5(a) (“Instead of furnishing a copy of the trust instrument to a person other than the beneficiary, the trustee may furnish to the person a certification of trust containing the following information: . . . .”)
  • Trusts and Trustees Act, 760 ILCS 5/8.5(f) (“A person who acts in reliance upon a certification of trust without knowledge that the representations contained therein are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification.”)