Topic: Trusts
-
We have a deposit account managed by our trust department that lists our bank as agent under a power of attorney. Can a bank with trust powers serve under a power of attorney for the account? If so, how should the account be titled?
—
by
Yes, a bank may serve as an agent for a deposit account under a power of attorney for property — provided that the power of attorney (POA) document includes the power to execute financial institution transactions. We note that in a 1991 Interpretive Letter, the Office of the Commissioner of Savings and Residential Finance (now…
-
We have a funeral home customer that is attempting to set up pre-need funeral trust accounts as separate accounts for each pre-need trust beneficiary, using each beneficiary’s social security number. We believe that Illinois law requires the customer to set up these accounts as sub-accounts under a master trust agreement, using the trust’s taxpayer identification number. Can you confirm?
—
by
We are not aware of a requirement under Illinois law to pool all pre-need funeral trusts under a master trust account. The Illinois Funeral or Burial Funds Act expressly permits a trustee to commingle pre-need funeral trust funds, but it does not require such commingling. As trustee, your institution may exercise that statutory authority to…
-
We are getting ready to book a new loan where the borrower is a land trust. Two of the three beneficiaries of the land trust will serve as guarantors on the loan, and are existing customers of the Bank. How can we complete a CIP on the land trust, which has no tax ID number? Do we have to require the land trust to obtain a tax ID number for banking purposes? Is there any other way around that?
—
by
We believe that you must obtain a tax ID number for a land trust, as you would for any other type of trust. The Customer Identification Program (CIP) rules require that you obtain a tax ID number from all customers, including trusts. Whether that tax ID should be a social security number or a separate…
-
Two spouses co-own a money market account. Each spouse also has a lifetime revocable trust. They would like to name both trusts as the payable on death beneficiaries of the money market account. Is that permissible?
—
by
Yes, Illinois law permits accountholders to select a trust as a beneficiary for a payable on death account, and it is possible to identify more than one beneficiary. For resources related to our guidance, please see: Illinois Trust and Payable on Death Accounts Act, 205 ILCS 625/2 (“‘Beneficiary’ includes a natural person who is living,…
-
We have five certificates of deposit (CDs) owned by a trust. The original co-trustees of the trust, husband and wife, signed the signature cards for the CDs. They later amended the trust documents to remove the wife as co-trustee. Does the wife have any rights in the CDs?
—
by
Because the wife has been removed as co-trustee, her rights as trustee have terminated, and she should not exercise control over the trust’s CDs. We recommend replacing the current signature cards for the CDs with new signature cards signed by the current co-trustees to reflect the amended trust terms.
-
A borrower is refinancing her first mortgage with us in order to pay off a personal loan from another bank. For HMDA reporting, based on the purpose of the transaction, should the loan be considered a purchase loan or a refinance? We also note that the original mortgage was in the name of the customer, but the refinancing will be in the name of her revocable living trust, with the customer signing as the trustee.
—
by
In our view, the transaction does not satisfy the definition of either a purchase loan or a refinancing under Regulation C and likely is not reportable under HMDA. HMDA requires lenders to report demographic data on certain types of transactions, including home purchase loans, home improvement loans, and refinancings. A home purchase loan is a…
-
How should we set up ‘benefit’ accounts that are established for the benefit of someone else (such as raising money for a friend’s medical bills)? Should we require that these customers have trusts? What happens if the customer dies and there is a dispute over the account ownership?
—
by
We recommend requesting that the individuals or groups opening these accounts obtain separate EINs for the accounts, rather than using an individual’s social security number. For example, the IRS EIN application expressly states that the following types of groups or organizations may obtain EINs, in addition to trusts: Block/Tenant Associations, Community or Volunteer Groups, Memorial…
-
Can we open a checking account for a trust if our bank does not have a trust department?
—
by
Yes. There are no laws or rules that would require a depository institution to have trust powers in order to establish and maintain a transaction account or to provide other financial services for a trust. Trust powers are not required when your bank will not be serving as a trustee or acting in another fiduciary…
-
I seem to recall a speaker on the topic of Certifications of Trusts saying that if a trustee voluntarily provides a copy of a full trust instrument instead of submitting a Certification of Trust, we should document this fact. What type of documentation should we obtain in such cases?
—
by
First, a clarification. If your bank requests that a trustee execute and submit a Certification of Trust form, and the trustee instead offers to provide the entire trust instrument, your bank is not required to accept the entire trust instrument. In fact, in most cases, accepting the entire trust instrument may not be desirable, since…
-
Can we use a Certification of Trust form for opening both deposit and loan accounts with a trust?
—
by
Yes, a Certification of Trust form may be used for opening both deposit accounts and loan accounts, as well as for all other dealings with a trustee that is a bank customer. Under Illinois law, a third party — such as your bank — may rely on a Certification of Trust in any instance “instead…