About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

Popular Posts

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”.

Related Pages: Ally Bank
  |     |   Comment #1
I am married with 1 son...... We are signing our trust this week...... I called the fdic and they said since I am opening a trust in my wife and my name that I could only insure it up to 500K.... 250K me with my son as bebeficiary and 250K my wife and my son as beneficiary......not interested in charities or anything else.
  |     |   Comment #2
To Anonymous - #1, you can get the same effect opening or adding a person as joint tenant without any expense and can add as many persons as you like and get more FDIC coverage,

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.
  |     |   Comment #3
Sounds like you had a crappy lawyer or leach relatives
  |     |   Comment #4
Er Anon #3;  are there any other kind of lawyers or relatives?
  |     |   Comment #5
Or, maybe you can gift some money to relatives while you're still alive. 
  |     |   Comment #6
My grandparents had a trust, my parents has a trust, now me and my wife got a trust, none of us had problems, it's the best way to go, avoids probate and troubles, like anonymous #1 said, he's cover for up to 500k he's got 1 kid, we are cover for up to 1 million dollars, we got 2 kids. Whether you have trust or not, if they want to sue you for anything they will.
  |     |   Comment #18
#6, i just check my trust papers, your right about pour over, my last page say  SCHEDULE "A" This schedule is to be attached to the  TRUST AGREEMENT dated________, year, and between my name  and my wife name as settlor and my name and my wife name as trustee.  we then can add any asset thats not listed in the trust...

by the way i am the anonymos 12, 14, 15.
  |     |   Comment #7
A shame Ally doesn't still let you retitle accounts into a trust. If you have a CD then you have to close it and open a new one. Fortunately I was able to retitle my accounts before they changed their policy to prohibit it. With the FDIC's current policies you get more coverage by adding someone as a beneficiary but give them some small amount like 1%. You'll get up to $250K coverage even if their share is much smaller than that. Doesn't apply after the trust assets get really large.
  |     |   Comment #8
Right on #6

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.
  |     |   Comment #9
To all of you who think the Trusts are great, just imagine the following:

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.
  |     |   Comment #10
#9 is speaking nonsense.  You only need to modify a trust when you want to change trustees or beneficiaries, not when you add or remove assets from a trust.
  |     |   Comment #12
#10 is correct, Also #11 is part right, not all banks allow to open revocable trust, American Express is one of them, so what you do, you open joint account with beneficiary, but others you can open joint revocable trust (trust must be drawn by attorney). After that, The only time you need attorney is when you want to change something in the trust.
  |     |   Comment #16
#9, you have absolutely no knowledge of how a trust account functions.  The comments made following yours have it right on.  Incidentally, assets that are inadvertently left out of the trust can be included in a trust with an all inclusive "will"within the trust.  I don't have the proper legal terms in front of me, but I know it can be done.  And like someone else stated,  regular CDs with designated beneficiaries will pass directly to the beneficiaries.  The beauty part of all this is no probate, no court delays or court costs.  Title transfers of ownership of titled assets are standard costs as in any person selling the same. 
  |     |   Comment #17
#16, I am not a lawyer, but I believe the term you are looking for is "pour-over" will.  An attorney once explained it to me this way:  if you forget to title an asset into the trust, the "pour-over" will allows you to "pour over" assets from the estate into the trust.    For example, the will might first dispose of personal property (leaving it to a spouse and children, for example), with the residue of the estate paid to the living trust. 
  |     |   Comment #11
To Anonymous - #10,, so what is the purpose of a trust if not all of the assets are inside the trust  all of the time.
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.
  |     |   Comment #13
To Anonymous - #12, what happens when the CDs are opened as individual CDs and later are transfered in the trust, but you close those CDs after few years?

Who will remove those nonexistent CDs from the trust or you just leave them there as bogus info?
  |     |   Comment #14
To# 13 you can have cd's in the trust and outside the trust,(regular cd) what I'm saying example, American Express don't allow trust accounts, so I open in joint account with beneficiaries. On my death this account will pass to my spouse, if both of us goes then it will be pass on to the beneficiaries . This is separate from the trust, everything else I own, car, house, jewelry, furniture, etc etc, is in the trust, it will go to the names that i list in the trust, Remember cd's that are open in the trust, on my death will go into the trust estate.
  |     |   Comment #15
To #13 in my trust papers, the last page I have is something like amend, where I can add anything that's not listed in the trust, but still if you have reg cd make sure you have beneficiaries who you want to have that money.
  |     |   Comment #19
correction... to anonymous #18 NOT #6
  |     |   Comment #20
sorry correction again to pearlbrown #17 not 18 or 6

The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.