16 Hoosier Banker April 2015 authority to pledge property of the trust to secure a loan. The bank may request that the trustee provide a certification of the trust1 and “copies of excerpts from the original trust instrument and later amendments that: (1) designate the trustee; and (2) confer on the trustee the power to act in a pending transaction in which the recipient has an interest.”2 If the bank requires the trustee to provide additional documentation (including a copy of the trust), the bank may be liable for damages if a court later determines that the bank did not act in good faith in demanding a copy of the trust.3 A certification of trust may be signed by any trustee; must state that the “trust has not been revoked, modified or amended in any manner that would cause the representations contained in the certification of trust to be incorrect;”4 and must contain the following information 1. That the trust exists and the date the trust instrument was executed; 2. The identity of the settlor; 3. The identity and address of the currently acting trustee; 4. The powers of the trustee; 5. The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust; 6. The authority of cotrustees to sign or otherwise authenticate and whether all or less than all the cotrustees are required in order COMPLIANCE CONNECTION Question: An individual has represented to the bank that he is the trustee of a certain trust, and that he wishes to pledge property of the trust to secure a loan from the bank to the beneficiary of the trust. The trustee has refused to provide a copy of the trust to the bank so that the bank may verify his powers under the trust. May the bank require the trustee to provide a copy of the trust? Answer: The bank is not required to accept the trustee’s mere assertion of aBout ComplianCe ConneCtion In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance program offering advice on Indiana-specific compliance questions. If the matter requires legal advice, IBA Compliance Connection will refer the bank to a law firm. The material in this issue was prepared by Larry C. Tomlin, partner with Krieg DeVault LLP, Indianapolis, and IBA compliance consultant. Submit Compliance Connection questions to IBA’s Amber R. Van Til at avantil@indianabankers.org. © 2015 Krieg DeVault LLP THINKING BEYOND TRADITIONAL SOLUTIONS FOR FINANCIAL INSTITUTIONS FOR OVER 130 YEARS • Corporate Representation • Mergers and Acquisitions • Capital Offerings • Regulatory • Compliance • Supervision and Enforcement • New Product Development • Litigation • Commercial / Consumer Loan • Creditors’ Rights • Trust • Tax • Securities • Employment • Intellectual Property One Indiana Square • Suite 2800 • Indianapolis, Indiana 46204 p: 317.636.4341 f: 317.636.1507 INDIANA • ILLINOIS • GEORGIA • FLORIDA • MINNESOTA www.kriegdevault.com
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