Banking 101: Why You Need an Emergency Fund and How to Build It
Banking 101: Understanding the Different Types of Savings Accounts
Banking 101: How to Transfer Money From One Bank to Another
Ally Bank’s Resource Guide for Establishing Trust Accounts
Ally Bank recently launched a resource guide about the advantages of trust accounts and steps for establishing trust accounts. In Ally’s resource guide, it describes how Ally customers can set up a trust account. This refers to a formal trust account which is different than an informal trust which can be set up by designating POD or ITF beneficiaries on your bank account. A formal trust account requires that you first establish a legal trust agreement which is usually done with the assistance of an attorney. Once this is done, banks can then open a trust account. In the case of Ally Bank, you have to fill out a trust account application and mail in required documents.
An overview of why you would want a formal trust account is described in In the questions section of the Ally’s trust resource guide:
A trust can be a useful financial planning tool to help you (the grantor) ensure your assets are protected and that your beneficiaries are cared for in the future. A trust can also help you reduce estate taxes and avoid probate (the sometimes long and complicated process of settling an estate). An attorney can help you obtain a legal trust agreement and name the trustee, who is the person who will manage the trust once it has been established. Then an Ally account can be opened for the trust.
We have more details in the our article, What You Need to Know About Revocable Living Trusts.
Formal revocable trusts are similar to informal revocable trusts in terms of FDIC deposit insurance coverage. This can be useful if you want to insure over $250,000 at one bank. I described how this can be easily done in my post Maximizing Your FDIC Coverage with Beneficiaries.
For informal revocable trusts, payable-on-death (POD) or similar terms must be in the account title, and beneficiaries must be identified in the bank’s deposit account records. For formal revocable trusts, the account must be titled in the name of the formal trust, and the beneficiaries must be identified in the trust agreement.
Details of FDIC deposit insurance of revocable trust accounts can be found starting on page 31 of the FDIC Comprehensive Seminar on Deposit Insurance Coverage For Bankers.
For irrevocable trust accounts, the term irrevocable means that the grantor (person who created the trust) does not possess the power to terminate or revoke the trust. According to page 70 of the FDIC document, “insurance coverage for irrevocable trust deposits is usually no more than $250,000”.
Don’t be fooled by the trust, they are all vulnerable to law suits, IRS and other creditors because it is a public document and all inside it is exposed to any prying eyes for easy money.
The attorney who created the trust is salivating and thinking on how to get a piece of the pie after it is created. They may intentionally leak the info to relatives, creditors or the state or anyone with any tiny interest to start a law suit against the trust and then he will tie it up in courts for years and years and will ask the court to release money for his own fee for services rendered.
How I know all these, It happened to my parents trust and I as beneficiary received only a fraction of the trust money.
by the way i am the anonymos 12, 14, 15.
My grandparents didn't have a trust. They didn't know what a trust was. But my dear deceased parents had established a trust. After experiencing how smoothly things transpired after their passing, my wife and I also established a trust. The advantages of a trust far out way any disadvantage. Although I would not establish a trust through a bank but rather through a privet practice attorney. The initial cost (attorney fees) and time spent to establish the trust is the only drawback but certainly not a deterrent.
I open and close CDs on regular bases, 20 on average in the last 5 years.
Every time you open or close a CDs your attorney must amend the trust and charge a good money for his time. Your profit from the CDs just went to your attorney for good.
I buy and sell real estate all the time, 5 in the last 5 years, and again you must call your attorney and amend your trust again and again with more fees paid.
I buy some gold coins from time to time, and you will have to pay your attorney again for the modifications.
I opened 8 RCAs and closed 5 RCAs in the last 5 years, if I had a trust, the modification is in order again and again.
What I’m trying to say is that a trust is not good for active persons who do some or more of the above or they have a business included in the trust.
The amount of paperwork and the money paid to the attorney, defeats the purpose of the trust.
Every asset you own must be titled to the trust, not practical and very expensive to create and keep it current. What if your attorney forgets some of your assets to include in the trust, what if you die before the assets are titles and properly registered to the trust, what if some loony creditors attacked the trust in a law suit, all of your assets are exposed to the court for grab and you can not hide any assets, after all your trust is a public record.
And at the end, if your wife wants out of the marriage, you are totally ****ed and must serve it on a silver plater, 1/2 of what ever the trust is worth.
You can can die in an accident and you will leave the rest of the assets in a limbo.
You open $250k CD for 5 years in you name (most banks do not allow trust name to be used) and you will leave it out of the trust, how irresponsible can you get.
Who will remove those nonexistent CDs from the trust or you just leave them there as bogus info?