Bank of America Ignores Arizona Law
My client who went to Bank of America to open a bank account for his LLC owned by his revocable living trust that he signed digitally sent me an email that said:
“I just went to Bank of America and they refused to open my bank account because [the trust was] not notarized. I showed them the statute from your help document for that exact situation and they didn’t seem to care and said it was per policy that they can’t accept the electronic signature.”
Because I know Bank of America, Wells Fargo, and Chase employ idiots, I give the purchasers of my Gold LLC formation package that includes a revocable living trust a letter that contains the following text:
What to Do If You Encounter an Idiot Banker Who Says the Trust Must be Notarized or the Bank Won’t Recognize Electronic Signatures
If you try to open a bank account and the banker says the bank will not open the account because your trust agreement and/or certification of trust was electronically signed or because they were not notarized then show the banker the text below that is the exact text contained in the applicable Arizona statutes.
Arizona Trust Law
The following Arizona statutes state how an Arizona trust is created. Note: These Arizona statutes do not require that an Arizona trust agreement be witnessed or notarized.
Arizona Revised Statues Section 14-10401. Methods of creating trust states:
“A trust may be created by:
1. Transfer of property to another person as trustee during the settlor’s lifetime or by will or other disposition taking effect on the settlor’s death.
2. Declaration by the owner of property that the owner holds identifiable property as trustee.
3. Exercise of a power of appointment in favor of a trustee.”
Arizona Revised Statues Section 14-10402. Requirements for creation of an Arizona trust states:
“A. A trust is created only if all of the following are true:
1. The settlor has capacity to create a trust.
2. The settlor indicates an intention to create the trust.
3. The trust has a definite beneficiary . . .
4. The trustee has duties to perform.
5. The same person is not the sole trustee and sole beneficiary. [Note: The same person is not the sole trustee and sole beneficiary of a trust if the trust has an initial trustee, a successor trustee, an initial beneficiary and one or more future beneficiaries.]
B. A beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities.
Arizona’s Electronic Signature Statute
Arizona Revised Statues Section 44-7007. Legal recognition of electronic records, signatures and contracts states:
“A. A record or signature in electronic form cannot be denied legal effect and enforceability solely because the record or signature is in electronic form.
B. A contract formed by an electronic record cannot be denied legal effect and enforceability solely because an electronic record was used in its formation.
C. An electronic record satisfies any law that requires a record to be in writing.
D. An electronic signature satisfies any law that requires a signature.”
Lesson to Be Learned
Do not try to open a bank account with Bank of America if your LLC is owned by a trust.
