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Question On Bank And Brokerage Account And Living Trust

GH1
  |     |   1,058 posts since 2017

What experiences good or bad has anyone had using a living trust and bank accounts and brokerage accounts

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Ltssharon
  |     |   472 posts since 2020
My experience with revocable living trusts in the 3 main brokerages, credit unions, and bands have all been good over 13 years. Some have to see the original trust papers (just pages showing beneficiaries and signature pages) while others will take xerox copies of these. Only 1 place (Barksdale credit union) was not set up to handle these trusts.
Also, a relative who died had a trust with me as one of the coexecutors. Both of us coexecutors were needed to sign and usually notarize when we took money out.
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GH1
  |     |   1,058 posts since 2017
Thank you for the information
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CuriousDave
  |     |   233 posts since 2018
Please be aware that any kind of trust can own brokerage accounts as long as the trust document allows it. Also, the term “living trust” simply means that the trust came into being during the lifetime of the trustor/grantor/settlor. For that reason, when that person dies, it remains a “living” trust. Some people direct in their wills that upon their death, one or more trusts come into being. Such trusts are “testamentary” trusts because they come into being after death, as opposed to “living” trusts. Brokers and others who open accounts for testamentary trusts will usually ask for copies of the pages of the will that include the provisions for creating (as well as the various requirements of) the testamentary trust, as opposed to asking for applicable pages of the trust documents for living trusts. That is because the provisions of wills relating to testamentary trusts take the place of trust documents of living trusts. In both situations, the brokers look especially for provisions that name the trustee(s) and that empower the trustees to open and transact in brokerage accounts.
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me1004
  |     |   1,381 posts since 2010
I'm not the expert on these matters, but in the past year I had my oving trust made. I asked into the question of ythis thread at a few creidt unions. I was told what you need for opeinign them is simply the trust certificate, not the pages that say who the beneficiares of the trust are and how much they get. The trust certificate does not say that, at least mine does not, and I had the lawyer make it for me.

I have chosen not to fund my account at this time, it has been signed (executed), so it exists, but it has no money it is so far. It will be funded at time of my death as POD beneficiary on my bank and CU accounts.

Just a week ago, I queried the FDIC and NCUA. Maybe what I have learned is helpful.

I chose to instead list the living trust on my accounts as beneficiary because it seemed like complications to me to fund it now, I suppose mainly because I don't really know all the little details, especially about filing taxes. How can it be in a trust, yet I still can just file an individual 1040 under my name instead of the trust name?

Instead, I have listed my living trust as beneficiary on my various credit union and bank accounts. I have not needed to provide any paperwork for that, and FDIC and NCUA confirmed that. I will still get the extra FDIC or NCUA insurance coverage based on the number of beneficiaries in the living trust and how much each gets, even though that information is not on file at the bank or CU -- FDIC and NCUA gave me that explanation in writing. But if the financial institution were to be liquidated, I, or someone, would have to present the trust showing beneficiaries and amount for each to the FDIC or NCUA at that time.

There are a lot of little details about it. In fact, the FDIC explained that I should list only the name of the trust as beneficiary because the beneficiaries in my trust get differing amounts. I gather if they get the same amount, you list them instead -- but that sounds wrong to me, even though FDIC and NCUA suggested it, as that would take that money out of the living trust altogether. Basically, it would multiply the number of trusts -- the POD trust(s) and the living trust. But since my trust has unequal distributions to differing people, I don't have to deal with that issue.

I have had no trouble doing that with any of the accounts, although the one bank I did it with recently was insisting I would get only the POD coverage of one beneficiary, that is, no extra coverage. FDIC says otherwise.
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GH1
  |     |   1,058 posts since 2017
That's a good point. Amount of FDIC insurance. My thoughts would then be a brokerage like fidelity. Brokered cds if only one person insurance per bank. Some people say a trust is better than just beneficiary. .I guess wills can be contested and trust is hard to contest. What problems all exist. Gives a headache.lol
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CuriousDave
  |     |   233 posts since 2018
The most common reason for using trusts is to avoid the problems associated with probate, where the court gets to control the administration of the estate and the timing and amounts that can be distributed, where the estate is subject to public disclosure, and the significant costs that must be paid. In some cases probate may make sense, such as when there is animosity among surviving family members and the probate court can be a helpful neutral party. Designating beneficiaries to specific assets like bank, brokerage and Treasury Direct accounts will also avoid probate and will by-pass having to rely on the successor trustee to act on behalf of the beneficiaries - which may or may not be a good idea, depending on the circumstances of each situation.
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ocsteve
  |     |   96 posts since 2010
Living Trusts with differing beneficiary percentages are covered by the FDICs relatively new rules (clarifications) on 5 or more ultimate beneficiaries with differing percentages under a Living Trust vesting are covered to a minimum of $1.25 million. Ken had a link to the FDIC website that covers this topic. The FDIC prepared a training aide for Bankers on various account vestings with specific examples of insurance coverages. That is the document you should review closely. I would think you will gain confidence in your insurance account vesting decisions. Hope that helps!
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