Topic: Trusts
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We have an IRA customer who passed away last year. He named his five children as beneficiaries. They want to know whether they have to break down the IRA into five inherited IRA’s — one for each beneficiary.
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No, we are not aware of any requirement that multiple IRA beneficiaries must open separate inherited IRA accounts, but the IRS rules permit them to do so at any time. For resources related to our guidance, please see: IRS Publication 590-B — Distributions from Individual Retirement Arrangements (IRAs) (2015) (“A single IRA can be split into…
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Is a trust account included in the definition of commercial account when considering Regulation GG?
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A trust is not a commercial customer under Regulation GG unless the trust operates a business. Regulation GG requires financial institutions to establish policies to ensure that commercial customers do not originate or receive restricted transactions under the Unlawful Internet Gambling Enforcement Act. The Federal Reserve Board has noted that “for purposes of the rule, a…
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We have a customer who has named her two children as beneficiaries on her IRA. If one of her children predeceases her, who inherits that child’s interest in the IRA? The owner would like the deceased child’s interest to pass to their estate rather than the other living child.
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If one beneficiary dies before the IRA owner, we believe that beneficiary’s share would be divided equally among the other surviving primary beneficiaries. If the owner wants the estate of a deceased child to inherit that child’s portion of the IRA, then the owner should consult with an attorney regarding the proper way to amend…
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We have a savings account held by a trust. The sole trustee of the trust has a daughter, who recently told us that the trustee is incapacitated, that she is successor trustee and that she wants to take over the trust. We reviewed the trust agreement, which is unclear. We interpret the trust agreement to require the father to resign as trustee before the daughter can take over. What documentation should we obtain from the daughter? Do we need proof of the trustee’s incapacitation or proof of his resignation?
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In our view, you do not need to obtain proof of the existing trustee’s incapacitation or resignation, but you should request a Certification of Trust form from the daughter. We emphasize that your bank should not attempt to interpret trust instruments, which as you point out, can be unclear. Under Illinois law, you may request…
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We recently converted to a new statement rendering system that differentiates between consumer and non-consumer accounts. We have revocable trusts where the beneficiary, trustee, and settlor are all the same person. Some of these trusts are opened using the individual’s tax identification number (TIN), and some are opened using an Employer Identification Number (EIN). The new system does not consider the EIN trust accounts to be consumer accounts. Is a trust considered a “consumer” under Regulation DD? I know that trusts (including land trusts) are considered to be “consumers” under Regulation Z for disclosure and rescission purposes.
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A trust is not subject to the requirements of Regulation DD, provided that the account was opened by a trustee pursuant to a formal written trust agreement. Under Regulation DD, “consumer” means “a natural person who holds an account primarily for personal, family, or household purposes, or to whom such an account is offered.” The term “natural person”…
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Can an account holder add a trust as a beneficiary to a regular checking or savings account in Illinois? How do we accomplish that?
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Yes, a trust may be added as a beneficiary to a checking or savings account. Under Illinois law, a savings or checking account holder may convert their traditional account into a “payable on death” account by signing an agreement with their bank providing that on the account holder’s death, the account shall be paid to…
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One of our customers would like to open a deposit account for a Miller Trust. How should we set up this account? What should we be tracking?
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When opening any type of deposit account, you should follow your standard deposit account opening procedures, which, in the case of a trust, should include obtaining certain information about the trust and its trustees (and, in some high risk circumstances, also about the trust’s beneficiaries). The IRS requires the taxpayer identification number (TIN) used for…
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We have two deposit customers who recently died. The first customer’s estate is represented by an executor. Can we permit the executor to deposit a check made out to the decedent into an estate account? The second customer was a joint accountholder with his wife. Can the wife deposit a check made out to the decedent into the joint account?
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Yes, an executor has the authority to endorse and deposit checks made out to the decedent into the estate’s account. In the second situation, however, we do not recommend permitting the wife to deposit the check into the account (which is no longer a joint account), unless fewer than ten days have passed since your…