Topic: Trusts
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We are looking at what time frame for record retention we need to observe for documents in our Trust Department. We are trying to create some space in our vault. What items can be imaged instead of keeping actual paper documents? What items do we need to retain as paper documents forever?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. The general rule under Illinois law is that electronic versions of documents have “the same…
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Do the Regulation Z disclosure requirements, including notice of the right to rescind, apply to revocable or irrevocable trusts?
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Yes, but only if the credit is being extended primarily for personal, family or household purposes. The CFPB views such credit transactions as being “in substance (if not form) consumer credit . . . .” Moreover, the CFPB does not differentiate between revocable and irrevocable trusts for this determination. For resources related to our guidance, please see:…
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Is it a best practice to accept a trust account certification in lieu of requiring the entire trust agreement when opening a trust account? One of our new employees noted that we could be held liable for a trustee’s wrongdoing if we obtain a copy of the entire trust agreement.
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There is no law that expressly requires you to obtain the entire trust instrument when opening a trust account. For example, the Customer Identification Program (CIP) rules require you to collect a name, address, and tax ID number for a trust, but they do not require that you obtain the trust instrument itself when a…
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Instead of requiring the actual trust instrument as part of our customer identification program, can we use the new certification of trust? Are there statutory protections for using the certification of trust? Also, can we still ask for the entire trust instrument?
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Yes, you may accept a certification of trust form in lieu of obtaining the entire trust instrument. There is no law that expressly requires you to obtain the entire trust instrument when opening a trust account. For example, the Customer Identification Program (CIP) rules require you to collect a name, address, and tax ID number…
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Can a revocable trust rent a safety deposit box?
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Yes, the Trusts and Trustees Act specifically permits a trustee to enter into an agreement for a safety deposit box. For resources related to our guidance, please see: Trusts and Trustees Act, 760 ILCS 5/4.06 (“The trustee has the powers specified in the Sections following this Section . . . .” “To enter into agreements…
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We recently received an IRS levy, which asked us to freeze the property of an individual who serves as a trustee for a trust account. The trust is a revocable trust, and the trust account uses the individual’s social security number. The scope of the levy covers property and rights to property, such as deposits. Should the bank report and freeze the revocable trust deposit account?
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No, the bank should not report and freeze the revocable trust deposit account, provided that the trustee is not the grantor or a beneficiary of the revocable trust. A federal tax levy attaches to all property or “rights to property” of a delinquent taxpayer. State law determines whether a person has a right to property,…
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We saw that a recent amendment to the Trusts and Trustees Act sets up a certification of trust process. Do we need to have certifications on file for our current trust accounts?
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No. The certification of trust procedure under the new law is voluntary, and it is not necessary to obtain certifications for your existing trust accounts. For resources related to our guidance, please see: Trusts and Trustees Act, 760 ILCS 5/8.5 (added by Public Act 99-337) (“Instead of furnishing a copy of the trust instrument .…
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Do we need to update account information under the Customer Identification Program (CIP) rules for a trust that has held an account with our institution since 1987? The account lists two signers but no trustees.
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No, the CIP rules do not require you to update the account information for this account, but it may be prudent to obtain additional information to confirm the accountholder’s “true identity,” which in this case would include obtaining information about the trustees for the trust. The CIP rules permit banks to grandfather certain accounts opened…
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Our policy is to ask for a copy of the trust instrument when opening a deposit account for a trust. Should we ask for anything else if the trust is a testamentary trust? The settlor for this trust already has died.
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No, it is not necessary to obtain any additional documentation to establish a deposit account for the trustee of a testamentary trust. Presently, whether you require an entire trust agreement before opening a deposit account for this or any other type of trust depends on your institution’s policies. There are no federal laws and presently…