Carter Ruml of KYEstates.com offers up a great summary of the facts and conclusions of the case of In Re Woods.  This case involved a mortgage granted on property held in a joint revocable trust, i.e. a joint living trust.  This case provides a lot of insights, including support for the claim of most ethical estate planners that most living trusts do nothing to protect your assets. 

Don't get me wrong, living trusts serve a lot of purposes, but because they are revocable trusts they usually won't provide any asset protection at all while the trustmaker is alive. 

What I found particularly interesting about this case is that the bank in question insisted on obtaining a copy of the revocable living trust but apparently did not read the trust.  I suspect most banks don't.  I opine that the result might have been better for the lending bank if the bank had NOT required a copy of the trust and thus could argue that it was not aware of the trust terms that required the consent of both trustees. 

I'm not advocating fraud here.  At a minimum the bank should have insisted on a certificate of trust and that certificate should have made it clear that the consent of both trustees was required.  However, if the husband had provided a certificate that did not make that clear, then the bank could have claimed ignorance and might have been able to collect on its collateral.  But by insisting that it have a copy of the trust AND the springing powers of attorney, the bank accepted responsibility for knowing the contents of both documents -- which apparently wasn't true for either the trust or the powers of attorney.