A trust is a legally binding arrangement whereby a settlor transfers title to another person, the trustee, for the benefit of a third, the beneficiary. Trusts in Massachusetts are governed by the Massachusetts Uniform Trust Code, codified at G.L.c. 203E.
There are two main classifications of trusts – testamentary trusts, which take effect upon the testator’s death (the settlor of a testamentary trust is called the testator), and non-testamentary trusts, which operate during the settlor’s lifetime. This article focuses on the latter.
A trust must meet certain qualifications: that the settlor has the capacity and the intention of to create a trust; that the trustee has duties to perform; and that there is a clear beneficiary (G.L.c. 203E, §402). The terms of the trust, including the appointment of a trustee and designation of a beneficiary, are established in the trust instrument, executed by the settlor.
Prior to enacting G.L.c. 184, §35, Massachusetts was among the few states requiring the full trust document for trusts containing real property to be recorded. Because of this, some people adopted complicated strategies to hide the identity of beneficiaries: “The objections primarily focused on the fact that many non-testamentary trusts are estate planning trusts and contain private financial information,” which would be readily viewable information upon recording .
Along with G.L.c. 184, §35, which governs trustee’s certificates for non-testamentary trusts, G.L.c. 203, §2 was amended to allow the recording of a trustee’s certificate in the place of the entire trust instrument in the registry of deeds or office of the land court in the district where the real property is situated. The trustee’s certificate is recorded either immediately upon the trust’s acquisition of real property, or when the trustee acts upon the title .
One advantage of a non-testamentary trust, then, is that the trust instrument is typically unrecorded, keeping the beneficiary names undisclosed. In nominee trusts, for example, a schedule of beneficial interests is filed with the original trustee and remains off-record.
For trustees, the administration of a trust may include conveyancing real property. Statutory optional fiduciary powers under G.L.c. 184B, §2 include the power of a trustee “to sell, exchange, or otherwise dispose of the property” (G.L.c. 184B, §2(1)(f)). Statutory optional fiduciary powers are not implied and must be explicitly granted by the trust instrument (G.L.c. 184B, §2). Purchasers receiving title from trustees are protected under G.L.c. 183, §34, in addition to the trustee’s certificate.
The Real Estate Bar Association of Massachusetts (REBA) Title Standard 33 also addresses conveyances of real property made by trustees. The Title Standard states that “title derived from a conveyance … by the trustee or trustees of record of a non-testamentary trust is binding on the trustee(s) and the trust in favor of a purchaser” when “a trustee’s certificate conforming to the requirements of M.G.L. c. 184, §35” is recorded . The REBA title standard encompasses all non-testamentary trusts, including nominee trusts.
To convey property, trustees use instruments called trustee’s deeds, which take their name from the granting party (trustee) rather than the type of warranty of title the deed carries, as in quitclaim deeds or warranty deeds. Trustee’s deeds in the Commonwealth of Massachusetts carry “quitclaim covenants,” guaranteeing title against defects during the grantor’s ownership of the property only.
Apart from naming the acting trustee, the trustee’s deed gives the name and date of the trust that the trustee represents. The trustee’s power to convey is confirmed by a reference to the recorded trustee’s certificate. All documents affecting real property require a legal description of the subject property, as well as a reference to the previous instrument from which the grantor obtained title (see G.L.c. 184, §25(3) for information on indefinite references involving trustees).
The trustee’s deed must be signed by all acting trustees in the presence of a notary public before it is recorded. Be aware that some counties in Massachusetts have multiple recording districts.
Note that conveyances affecting registered land in Massachusetts are required to go through the land court. The land court is a system of official registration whereby the Commonwealth of Massachusetts guarantees good standing of title; documents affecting registered land must adhere to strict requirements before they are accepted, as opposed to recorded land. In the regular system of recording, documents are accepted whether or not there is good standing of title, as long as basic recording requirements are met.
Speak to a lawyer with any questions regarding trusts in Massachusetts, trustee’s deeds, or trustee’s certificates, as each situation is unique and trust law is complex.