Topic: Trusts
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We have a group of customers that have organized to perform various charitable acts such as helping with the community park. They want to open an account with an initial deposit of $5,000. Do they need to register as a “charitable trust”? What other documentation will they be required to file?
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We agree with you, the group should register with the Illinois Attorney General Charitable Trust and Solicitations Bureau. The Charitable Trust Act governs funds held for a charitable purpose. Depending on if the group is soliciting funds, they may have to register under the Solicitation for Charity Act. Additionally, if your financial institution is acting…
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Our trust department is considering moving our commingled funds account to another institution. What are the pledging requirements for commingled trust funds that are held at a third party institution?
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First and foremost, the provisions of the relevant trust agreements might determine whether your institution may place the trust funds in a commingled account, whether your institution may place those commingled funds in a third party depository institution, and whether collateralization requirements might apply to those funds. The trust agreements very well may be silent…
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Will examiners object to pledging securities to secure private funds for a trust?
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Elsewhere in the Trust Examination Manual, the FDIC notes your concern about pledging securities for private funds and states: “In order for a state nonmember bank to pledge assets to secure private deposits, the bank must file an application for approval under Part 362 of the FDIC's Rules and Regulations.” Section E.3.b. ERISA, Deposit Insurance,…
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Can a customer set up a business trust account? The customer is a judgment collection agent, and disbursements would be coming out of the account and sent to the customer’s clients.
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We do not see any problem with setting up a business trust account for a customer that is a collection agency. The Illinois Collection Agency Act requires licensees under the law to set up separate bank accounts for each office, which must be referred to as a “Trust Account.” 225 ILCS 425/8c(a).
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How do we title a checking/deposit account for beneficiaries of a land trust and who would be the authorized signer? Also, do we actually need to obtain a Tax Identification Number for a land trust?
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We are not aware of any specific legal restrictions regarding titling deposit accounts for land trusts. The IRS has requirements for name controls, which require banks to establish name controls using the first four letters of a customer’s name. The IRS has stated that “[t]he name control for a trust or fiduciary account is developed…
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When a customer opens a deposit account for a trust, should we obtain a copy of the entire trust agreement? Some trustees wish to provide only a letter of opinion, in lieu of the trust agreement.
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Whether you require an entire trust agreement before opening a deposit account for the trust is up to your institution (given that your institution is not acting as trustee for the trust). We are not aware of any laws or regulations that would require you to obtain the entire trust agreement before opening a deposit…
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We have two customers, husband and wife, who have requested a joint account to be owned jointly by both of their separate revocable trusts. Would that be possible or advisable?
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It may be possible to combine funds from two separate revocable trusts into one account, but it is not advisable. Because the account holding the trust funds would be held by both trusts in joint tenancy, each trust would have rights of survivorship in the account. Joint Tenancy Act, 765 ILCS 1005/2. However, the trust…
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We have a customer that is a single-member LLC. The only member is a revocable living trust. Can we use the trust EIN for the customer’s account, or does the customer need to obtain a separate EIN for the LLC entity?
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We believe that you should use the trust’s employer identification number (EIN) for the LLC account. The IRS’s Single Member Limited Liability Companies webpage states that a single-member LLC should use the owner’s social security number “for all information returns and reporting related to income tax.” (Note that if the LLC has to file employment…
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In setting up an estate account for a customer who wants to deposit a check payable to a family member’s estate, do we need to obtain an EIN for the estate?
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We believe that your customer would need to obtain an employer identification number, also known as a taxpayer identification number (EIN or TIN), for the estate, even if an estate qualifies as a small estate under Illinois law. Under federal law, the IRS requires that every estate obtain an EIN, no matter the size of…