03 Sep Putting a Bank Account in a Trust: Why It Matters and How to Do It Right
Putting a bank account in a trust is one of the smartest estate planning steps you can take to protect your assets and simplify the inheritance process for your loved ones. After creating a revocable living trust, it’s crucial to fund it by retitling your bank accounts or naming the trust as a beneficiary. Without taking these steps, your assets could still end up in probate, delaying distribution and increasing costs. Here’s what you need to know about properly putting a bank account in a trust to ensure your estate plan works as intended.
Why Putting a Bank Account in a Trust Protects Your Estate
Creating a revocable living trust gives you a legal document that will protect your property, including your bank accounts and any other assets in your estate. You should put your bank accounts in a living trust to ensure the funds are easily accessible for your beneficiaries when the time comes to inherit.
The process of transferring your bank account to a trust requires new signature and ownership cards that retitle your bank account to the trust so that the trust becomes its legal owner. When it’s time to distribute your assets, the funds in the bank account will be paid into the trust.
Listing yourself as the trustee on the account gives you the freedom to control all the details of the trust during your lifetime. After you pass away, a successor trustee will take over to manage the trust and its assets on your behalf. It’s crucial that you list specific instructions in the trust document to help your successor carry out your wishes.
How to Put a Bank Account in a Trust: 5 Simple Steps
- Meet with your personal banker where your account is held.
- Tell your banker you would like to transfer a bank account into a trust.
- Remove any existing bank account beneficiaries.
- Present an official copy of the trust to your banker.
- Sign new signature and ownership cards.
What to Avoid When Putting Accounts in a Trust
While bank accounts are ideal for funding a trust, there are several other accounts and assets that do not belong in a trust. For example, putting 401ks and other qualified tax-deferred accounts into a trust in the wrong way may cause adverse tax consequences and should only be done with the help of an attorney. If you want to know more about what doesn’t belong in a trust, or if you have questions about putting a bank account into your existing trust, give your estate planning attorney at Phelps LaClair a call.
Get Help Creating a Revocable Living Trust in Arizona
Putting a bank account in a trust is a vital part of making sure your estate plan works the way you intend, helping your loved ones avoid probate delays and unnecessary expenses. If you’re ready to protect your assets and give your family peace of mind, the experienced estate planning attorneys at Phelps LaClair are here to help. Contact us today to learn more about putting a bank account in a trust and building a comprehensive estate plan that fits your unique needs.
We service Chandler, Mesa, Phoenix, Scottsdale, Glendale, Tucson, and beyond. By attending our free webinars on estate planning, you can learn how to avoid the top seven estate planning mistakes and gain a free consultation!
photo by Steve Buissinne| from pixabay.com on 9/1/2021 | used under the creative commons license | no edits made