Topic: Trusts
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When a customer with a personal deposit account at our bank seeks to cash a check made out to a trust account, our general policy is not to cash the check. Typically, the trust account is held at another bank, the customer is the trustee, and the check is made out to the “John Doe Trust,” or to “John Doe as Trustee for the John Doe Trust.” We also would not deposit a check made out to a trust or a trustee into the customer’s personal checking account. Customers frequently do not understand why we will not cash or deposit these checks since it is “their money and their trust.” Can you please advise what laws or rules support our policy?
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There are two answers to your question. Your policy of not cashing and depositing these checks is supportable under the Uniform Commercial Code (UCC), but you also could be protected by the Fiduciary Obligations Act (FOA) when cashing or depositing them under certain conditions. The UCC places a bank on notice of a potential breach…
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We are a national bank, and we recently moved our wealth and farm management groups into a separate, state-chartered trust company that will be regulated by the IDFPR and the Federal Reserve. Do the ID theft/red flag requirements and the FACT Act apply to the trust company? Also, if our trust company obtains cash from an estate in a fiduciary capacity and deposits the cash at our bank, which entity is responsible for the CTR filing? Would both the bank and the trust company file the CTR? If the trust company files a SAR on its own, could it use the bank’s filing number?
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State-chartered trust companies are subject to the Fair and Accurate Credit Transactions Act of 2003 (FACTA), including its identity theft/red flag requirements. With respect to who should file currency transaction reports (CTRs) in the scenario in your question, we believe that either the bank or the trust company may choose to file the CTRs for…
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We are a national bank, and we recently moved our wealth and farm management groups into a separate, state-chartered trust company that will be regulated by the IDFPR and the Federal Reserve. Which compliance regulations apply to a trust company? Do the following apply? BSA, OFAC, AML, CIP, USA Patriot Act, FACT Act, Elder Financial Abuse, UDAAP, and GLBA.
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Trust companies are subject to all the laws mentioned in your question. Broadly speaking, there are no exemptions for trust companies in the laws and regulations that generally apply to banks, bank holding companies, and their subsidiaries. Also, you mention in your question that the trust company will be regulated by the IDFPR and the…
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We have a certificate of deposit (CD) held by a grantor trust (our bank is not serving as trustee). When the account was set up, we used the grantor/customer’s social security number. The trust recently was amended to replace the original trustee (the grantor/customer) with his daughter as trustee. The daughter wants us to retitle the account and does not want to obtain an EIN for the trust. Can we retitle a trust account without obtaining an EIN?
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Yes, we believe that your bank may retitle this trust account without requiring an employer identification number (EIN), provided that the trust will continue to file an individual tax return (Form 1040) using the grantor’s social security number (SSN). Generally, the IRS does not require a trust to obtain an EIN if it is a…
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We are going to accept monetary donations for victims of a recent tornado. Can we accept donations made out to the bank? We have not yet decided on the charity that will receive the donations.
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To collect charitable donations made directly to your bank, we recommend establishing a dedicated account to hold the funds. We also recommend registering with the Illinois Attorney General’s Charitable Trust Bureau. Under the Charitable Trust Act, if a group or an individual will be holding more than $4,000 for a charitable purpose, it must register…
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An Illinois bill was introduced as HB 2526 to adopt the Uniform Trust Code (UTC). Has that bill been enacted? If Illinois has not adopted the UTC, can or should Illinois financial institutions use the Certification of Trust without obtaining copies of the trust instrument or portions of the trust instrument?
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No, Illinois House Bill 2526, based on the Uniform Trust Code, has not been enacted. As in the past few years, this bill was filed to enact an Illinois version of the UTC, but it failed to advance out of the House Rules Committee. However, Illinois has separately enacted certification of trust provisions in the…
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We have a deposit customer who is no longer competent. The customer’s daughter has come to us with a trust document naming the customer as the beneficiary and the daughter as the trustee, together with a power of attorney for the healthcare of the customer. The daughter would like us to retitle the accounts as trust accounts so that she can transact on them as the trustee. Can we make that change?
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No, we do not recommend making that change based on the documentation described. We do not believe the customer’s daughter has the necessary authority to have the accounts retitled or to transfer the funds into a trust account. The daughter’s power of attorney for healthcare allows her to make medical decisions for the customer but…
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Our bank has a customer who is the grantor of an irrevocable trust. The trust has a deposit account at our bank. The trustee of the irrevocable trust has died, and the trust agreement does not name a successor trustee. What happens now?
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When the role of the trustee becomes vacant due to death, resignation, or refusal or inability to act, Illinois law provides that the beneficiaries of the trust may appoint a successor trustee. When the amount of each beneficiaries’ interest in the trust estate is known, the beneficiaries with the majority interest may appoint a successor…
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We currently scan trust documents and death certificates and retain the scanned documents electronically. Do we need to maintain the physical documents after scanning them?
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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. We believe that your bank should retain original trust instruments and their codicils and amendments…