The Need for Medallion Signature Guarantees in Trust Accounts

Trusts are an important part of estate planning and typically allow parties to protect their property and provide for their loved ones while also avoiding the significant tax penalties associated with other means of passing on assets. There are certain measures people should take to safeguard their trusts, like obtaining a medallion signature guarantee. If you have questions regarding trusts and other estate planning tools that could help you protect your interests, it is advisable to contact a California estate planning attorney to evaluate your options.

The Need for Medallion Signature Guarantees in Trust Accounts

A medallion signature guarantee is a type of certification used to protect certain assets and accounts from fraudulent transactions. Generally, it combines the signature of a bank officer with a unique stamp and barcode and a compound with invisible ink to ensure that the transfer of securities, like bonds and stocks, is valid. While many financial institutions offer other types of certifications, a medallion signature guarantee offers a higher level of protection.

Medallion signature guarantees provide peace of mind that a person’s identity is confirmed, their signature is valid, and they are the legal owner of the property they are trying to transfer. When a transaction occurs with a medallion signature guarantee, the institution will assume liability if it is revealed that forgery has occurred. Medallion signature guarantees focus on the financial institution allowing the transaction, rather than the party making the transfer, and essentially provides a promise that the financial institution will reimburse any victims of fraudulent transfers.

Medallion signature guarantees may be required when stocks, bonds, or other securities are transferred to a trust. When they are employed, they typically eliminate questions regarding the validity of a transaction and allow parties to rest assured that if they fall victim to fraudulent transactions, their losses will be compensated by the entity that issued the medallion signature guarantee.

Obtaining a Medallion Signature Guarantee

Parties can usually obtain medallion signature guarantees from their financial institutions; they will be able to provide such guarantees if they are members of The Stock Exchanges Medallion Program, The Securities Transfer Agents Medallion Program, or The New York Stock Exchange Medallion Signature Program. Thus, smaller institutions may lack the capacity to issue medallion signature guarantees. Notably, only certain bank officers can issue medallion signature guarantees, and there are limits as to the amount they can secure. There may be a nominal fee associated with obtaining a medallion signature guarantee, but in many instances, they are provided at no cost.

Speak to a Skilled California Estate Planning Attorney

Trusts are essential estate planning tools that offer numerous advantages with little risk. If you are interested in learning more about trusts and how they could benefit you, you should speak to an attorney as soon as possible. The skilled family law attorneys at the Bay Area Family Law Center can advise you of your options and help you determine what estate planning tools are most appropriate to meet your goals. You can contact us at 925-258-2020 or through the form online to set up a meeting.

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