Topic: Trusts
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The trustee of a revocable living trust recently set up a savings account and checking account. The trust’s attorney told us to title the accounts in the name of the trust but that any checks should be imprinted with the individual grantors’ names, without reference to the trust. Shouldn’t the checks be titled exactly as the account is titled?
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Yes, we believe that the checks for these accounts should reflect the exact account names. While we do not recommend that a bank interject itself into a trustee’s decisions when merely providing deposit accounts for a trust, we do recommend printing account checks that show the account owner’s name. In this case, the account owner…
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A healthcare facility pools its residents’ social security insurance proceeds into one single “resident trust” deposit account. Is this account subject to FinCEN’s new legal entity customer due diligence (CDD) requirements? Or would the account be exempt as a trust account? Or as a pooled investment vehicle? The account funds are not invested in anything. The healthcare facility provided us with evidence of a surety bond regarding the account funds, but no evidence of a trust agreement.
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We recommend treating the healthcare facility as the ”legal entity customer” when opening this account, unless the facility can provide additional information demonstrating that it is a trustee opening the account on behalf of a trust (in which case it would be exempt from FinCEN’s new CDD rule). The account that you have described appears…
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Our trust department has been asked to act as executor for an individual who died in Florida. We believe the individual had residences in Illinois and Florida, but we have not seen the individual’s will and have no other information at this point. Can we serve as executor? In other words, how far do our trust powers extend geographically?
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We believe your answer will depend on the specific facts in this case, and we encourage you to consult with Florida counsel for further guidance. The Illinois Corporate Fiduciary Act authorizes your bank to engage in fiduciary activities — including serving as an executor — in another state, but those out-of-state fiduciary activities also are…
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Can a sole proprietorship account list a payable-on-death (POD) beneficiary?
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Yes, Illinois law permits a sole proprietorship accountholder to name a payable-on-death beneficiary. Accountholders may designate payable-on-death beneficiaries for “any account, deposit, certificate of deposit, withdrawable capital account or credit union share in any institution.” There is no exclusion for sole proprietorship accounts or other business purpose accounts. For resources related to our guidance, please…
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How long should our bank retain closed trust files in our trust department, which include trust instruments and attendant documents, such as transaction listings, paid checks, and bills? We currently retain hard copies of all of these documents.
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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…
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Does FinCEN’s beneficial ownership rule apply to loans made to a trustee of a land trust?
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No, FinCEN’s beneficial ownership requirements do not apply to land trusts and their trustees. FinCEN’s beneficial ownership requirements apply only to “legal entity customers,” defined to include corporations, limited liability companies, general partnerships and any “other entity that is created by the filing of a public document with a Secretary of State or similar office.”…
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Should our bank require the entire trust agreement when opening a trust deposit account? This would be for our deposit side, not our trust department (which requires the entire trust agreement when acting as trustee for a trust).
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No, we do not recommend requiring a full trust instrument when opening a trust account, subject to the discussion below. Neither Illinois nor federal law requires your bank to obtain a full copy of a trust instrument when opening a trust account. In fact, Illinois law requires banks to accept a Certification of Trust form…
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Can a customer name a living trust as a payable on death (POD) beneficiary on her checking account? What is the procedure to execute this?
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Yes, a trust may be added as a beneficiary to a checking account. Under Illinois law, a checking account holder may convert a traditional account into a “payable on death” account by signing an agreement with their bank providing that on the account holder’s death, the account shall be paid to or held by a…
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As a hypothetical, say we have two accounts sharing the same mailing address — Account 1 and Account 2. Account 1 has just one owner, individual A. Account 2 has two owners, individuals A and B. Under the new Illinois unclaimed property law, if Account 2 is active due to individual B’s activities, does that count as activity on Account 1, even though individual B has no ownership interest in that account? Also, what if individual B has an active deposit account and is the beneficiary of a revocable trust account (in other words, he is not the legal owner of the trust account) that is using the same social security number and mailing address as the individual deposit account?
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As to your first question, we do not believe that activities by a non-owner of Account 1 could cause that account to be considered active. As to your second question, activities by the beneficiary of the trust account would cause both the trust account and the beneficiary’s individual account to be considered active. The new…
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Under the beneficial ownership rule, how can we find out if a trust is a statutory trust “created by a filing with a Secretary of State or similar office”? Does the Secretary of State’s website contain listings?
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We recommend incorporating a question into your account opening questionnaire and customer due diligence (CDD) procedures that requires your customers to identify whether they are a statutory trust. Unlike ordinary trusts, statutory trusts (also known as “business trusts”) are formed by filing a certificate of trust or other filing with a public official, typically the…