Beckstrom & Beckstrom, LLP

Setting up a trust is one of the best ways to ensure your assets are protected when you pass away. Many families struggle to access the assets their loved ones leave them when the decedent’s estate has to go through probate. However, if your assets are placed in a trust, they can be transferred to the beneficiaries when you die without having to go through probate.

When you are setting up your trust, your estate planning attorney can help you determine which assets should be included. Many people wonder whether they should include their bank accounts in their trust. There are many benefits and considerations to keep in mind when including bank accounts in your trust. Here is more:

How Trusts Work

A trust is a type of investment account that allows you to hold your assets until you pass away, at which point they are distributed to your beneficiaries. There are three primary parties involved in trusts, including:

• The grantor – The grantor is the one who establishes the trust and can determine which assets should be included. They also decide who the beneficiaries will be and who the successor trustee should be.
• The successor trustee – The successor trustee is the individual or entity responsible for managing the trust should the grantor be incapable of doing so or pass away.
• Beneficiaries – Beneficiaries are the parties who will receive the assets being held by the trust.

Key Benefits of Including Bank Accounts in a Trust

There are many benefits to placing your bank accounts in a trust. You have the power as the grantor to decide which assets your trust holds. While there may be multiple considerations to keep in mind, the benefits of including a bank account in your trust are undeniable. Some of the key benefits include:

• The ability to avoid probate court.
• Protecting your assets from lawsuits and creditors.
• Being able to distribute your assets to beneficiaries more quickly.
• Ensuring your trust is still properly managed if you become incapacitated.
• Utilizing potential tax advantages that come with managing the assets within your trust.
• Maintaining the privacy of your assets, which does not happen when your will goes through probate.

Considerations When Including a Bank Account in a Trust

Although there are many benefits to including a bank account in a trust, there are some considerations to keep in mind:

• Make sure you choose the right type of trust to place your assets in based on your estate planning goals.
• Ensure your trust is secured and in line with your goals by working with an experienced estate planning lawyer.
• Choose a successor trustee you can depend on to manage the trust when you become incapacitated or die.
• Plan for FDIC insurance coverage depending on the number of beneficiaries and the type of trust.
• Hire a trusted manager, attorney, or third-party management team to administer the trust.
• Inform beneficiaries that they have been included in your trust and make sure they know which types of assets they will receive and when.
• There may be implications if you make regular withdrawals from the account.
• Automatic payment transactions may be disrupted after transferring your account into a trust.

Steps to Include a Bank Account in a Trust

When you are ready to add a bank account to your trust, there are certain steps you can take with help from your attorney:

• Contact your bank to find out if there are any bank-specific steps you should take.
• Complete the necessary documents, including a certificate of trust, and letter of instruction, and provide the necessary signatures.
• Ask the bank to transfer the title to your successor trustee.
• Review finalized statements to ensure the bank account ownership has been changed.

Bank Accounts and Trust FAQs

Putting a bank account in your trust could help to protect the funds in the account, but there are many considerations that need to be taken into account. We understand you may have many unanswered questions about whether you should include a bank account in your trust and what to expect if you do.

For that reason, we have answered some of the top FAQs surrounding bank accounts and trusts in your estate plans below. If you have additional questions or concerns we do not cover on this page, contact us to schedule a confidential consultation.

Do I need to have a separate bank account to open a trust?

You do not necessarily need to have a separate bank account to open up a trust. However, you likely have multiple accounts in place before ever having set up your trust. You do not need to create a new bank account to set up a trust. However, when certain types of assets held within the account are transferred ownership, certain types of documents and paperwork will need to be completed.

Which types of accounts should I put in a trust?

Some types of accounts can be safely placed in a trust without any potential financial implications. For instance, you might want to put your checking or savings accounts, stocks or bonds, safety deposit boxes, or even annuities into your trust. You can work with your estate planning lawyer to determine which types of accounts and assets should be placed into your trust. However, this does not mean every type of account should be placed in a trust.

What should not be put in a trust?

Certain accounts and assets should not be placed in trust. They can create unnecessary implications, penalties, or complications. If you use the assets regularly, like you would a vehicle, it may not be wise to place them in a trust. You should also keep medical or health savings accounts and retirement accounts out of trust. There may be better ways to safeguard these assets.

Make These Important Decisions With Help From Your Estate Planning Attorney

Figuring out whether you should include your bank accounts in your trust is a personal decision. In many cases, including bank accounts is one of the best ways to protect your money for your beneficiaries. However, you must consider the possible implications that may come if you expect you may need to continue making withdrawals from these accounts after it has been placed in a trust.

Our estate planning attorneys from Beckstrom & Beckstrom can help you understand the intricacies of setting up a trust and whether it is in your best interest to add your bank accounts to a trust. Discuss your estate plans further when you contact our team to request a confidential consultation. Reach us by phone or through our secured contact form to schedule yours as soon as today.