Topic: Trusts
-
A customer with a trust account died, and the successor trustee has obtained an EIN and will be opening a new trust account. If the trustee has checks payable to the deceased customer’s estate, can they be deposited into the new trust account?
—
by
Generally, a check made out to an estate should be deposited only into an estate account, and depositing the check into a trust account could result in a breach of the Uniform Commercial Code (UCC) warranties. We do not recommend accepting checks payable to the deceased customer’s estate for deposit into the new trust account,…
-
We have a checking account for a customer who recently passed away. We became aware of the death a month after it occurred. There are two beneficiaries on the account: the deceased customer’s adult son and the daughter of his second wife, who is a minor. There is a dispute between the beneficiaries’ families, and we are trying to protect the bank from liability. How do we handle distribution to the minor? Is the minor’s mother required to be appointed as guardian of her property? If we have to wait for court documents, do we have to wait to disburse the other half of the funds to the adult son? Additionally, there are ACH debit transactions that posted after the customer’s death. These transactions are consistent with patterns on the account when the customer was alive, but we are not sure whether the transactions belong to the deceased customer or his adult son, as they both have the same name.
—
by
We believe that if the designated beneficiaries are making conflicting claims as to the relevant payable on death (POD) account, your institution should utilize the protections available under the Illinois Trust and Payable on Death Accounts Act and refuse to distribute the account proceeds until the beneficiaries provide a court order directing distributions from the…
-
What trust paperwork should we collect when opening a revocable living trust account when the bank is not a trustee? Is it better to collect only certain pages, or should we collect the entire trust? Does having the entire trust put us at a greater risk of liability for not following stipulations of the trust?
—
by
We recommend that you request a certification of trust from the trustee instead of the entire trust instrument when opening a trust account (given that your bank is not serving as trustee), unless you have specific BSA/AML concerns or otherwise are required by law to inspect the entire trust instrument. There is no law that…
-
A customer who is the trustee of a trust received a grain elevator check made out to the trust, after they had already closed the trust’s account at our bank. Since we have the trust papers on file, can we issue cashier’s checks to the individual beneficiaries specified in the trust who should receive the funds? Also, should the check first be deposited into the trustee’s personal account, or can we deposit the check into our bank’s general ledger account? The parties involved have been customers for many years, and we are familiar with how the funds should be distributed.
—
by
We recommend depositing the check into the trustee’s personal account — after confirming that they are empowered to endorse checks made payable to the trust — then issuing cashier’s checks as the trustee directs and pays for with their personal funds. The Fiduciary Obligations Act (FOA) generally shields banks from potential liability that may result…
-
We have opened a benefit account for a customer for the purpose of raising funds for a high school student’s medical procedure. The customer has applied for and received a tax ID for the account, and we have classified it as an account for an unincorporated association. However, they have raised more than $25,000 since the account was opened. Is the account now subject to the Illinois Charitable Trust Act, and, if so, what responsibility or reporting requirements does our bank have? We are not sure whether this account has been registered with the State Attorney General.
—
by
The Charitable Trust Act may apply if the beneficiary is still a minor. While this law does not impose any additional responsibilities or reporting requirements on your bank, we believe that you should inform the accountholder of their potential requirements under the Act and request a copy of their registration as a charitable trust, if…
-
We have a customer who wants to add an agent under a power of attorney to an already established revocable trust account. Does Illinois allow this?
—
by
Yes, Illinois law does allow an agent under a power of attorney (POA) to exercise a trust settlor’s powers “with respect to revocation, amendment, or distribution of trust property,” provided that the power of attorney expressly authorizes the agent to exercise such powers, and provided that the trust instrument does not prohibit the agent from…
-
A customer would like to name her personal trust as the beneficiary of her payable on death (POD) account. Is this permissible?
—
by
Yes, we believe an individual may name their personal trust as the beneficiary of their POD account. The Illinois Trust and Payable on Death Accounts Act allows an individual to sign an agreement with a bank “providing that on the death of the last surviving person designated as holder the account shall be paid to…
-
We have a customer who would like to open an account to fund donations for a relative that has recently passed away. How can such an account be opened under Illinois law? Additionally, what tax ID should the bank use and who should the checks be made payable to?
—
by
We recommend that your bank request that the individual opening the account obtain a separate EIN for the account, rather than using the individual’s social security number. Using a separate EIN with the memorial or benefit fund’s name in your account records should help to avoid confusion for IRS reporting and other purposes. Additionally, checks…
-
A customer with two accounts held in individual ownership recently died. We received a copy of the customer’s will, which was filed with the court in December, and which names an executor and states that the executor is responsible for paying the estate expenses out of the remainder of the customer’s estate. The will also states that the remainder of the estate will pour over to the customer’s revocable trust. The trustee of the trust wants to close the accounts, and we have not had any communication with the executor. Who has the authority to close the accounts?
—
by
It does not appear that you have sufficient information to determine who may close the accounts or to determine whether the accounts are held in the trust or the customer’s estate. As a result, we do not recommend closing the accounts based on the trustee’s request alone. The Illinois Probate Code authorizes pour-over wills in…
-
We have a customer who would like to move funds from a personal checking account to an irrevocable child’s trust naming himself as the only trustee. What is our liability if he uses the money for personal use? Are we obligated to monitor withdrawals that the trustee transacts in the trust account? The customer has told us his intent is to shield the funds from the child’s other parent, and we know that the customer will continue to use the funds like it is his own account, even though it is under the child’s trust ownership.
—
by
First, we recommend obtaining a Certification of Trust from the customer to verify that your customer is a trustee of the trust with authorization to manage the trust’s bank account. Under the Illinois Trust Code, a bank cannot be held liable for acting in reliance upon a certification of trust unless the bank has actual…