Topic: Trusts
-
Can small estate affidavits be filed in court? When I called a local court to ask, I was told that while it’s not required, some individuals choose to file small estate affidavits with the court.
—
by
We are not aware of any prohibition against filing a small estate affidavit with a court. However, we agree that such a filing is not required in Illinois. The Illinois Probate Act requires a financial institution to comply with a small estate affidavit that is in substantially the same form outlined in the Act, and…
-
We have several questions about the Department of Labor’s (DOL) Fiduciary Rule. We offer CD IRAs and health savings accounts (HSAs). We don’t collect any custodial or periodic fees for these accounts. Are HSAs covered by the rule? How should we handle distributions from our CD IRAs? Can we refer our customers to our wealth management department (without compensating employees for these referrals)?
—
by
The DOL rules expressly include health savings accounts in the definition of an IRA, but the new Fiduciary Rule will apply only if your bank is providing “investment advice” (as defined by the new rule) for “compensation” (as defined by the rule) in connection with the HSAs. Similarly, the Fiduciary Rule could apply to distributions…
-
If a customer has money invested in a funeral trust (with the funds invested in a certificate of deposit) and wants to cash it in, can we assess an early withdrawal penalty? The trust beneficiary is still alive, and it is not our practice to waive early withdrawal penalties unless the owner has died. The funeral home that owns the account is saying that we cannot assess a penalty. The CD states on its face that there will be a penalty for early withdrawal, along with the amount of the penalty.
—
by
We believe you may assess an early withdrawal penalty for the certificate of deposit (CD) held for the funeral trust, because the penalty is one of the terms of the CD account. The provisions in the Illinois Funeral or Burial Funds Act (which governs both the funeral home and funeral trust beneficiaries) on which the…
-
How will the Department of Labor’s Fiduciary Rule affect our bank’s trust department? Our trust department serves as custodian for self-directed IRA trust accounts and charges the beneficiaries a flat annual fee. We do not provide investment advice; the beneficiaries direct the IRA’s investments. When directed by a beneficiary, our trust department occasionally purchases shares of mutual funds from companies that are not affiliates of the bank. Two of the companies sent us letters stating that they aren’t considered investment advice fiduciaries.
—
by
Whether your bank is subject to the new Fiduciary Rule is a very fact-specific question. Even without providing advice on specific investments, your bank’s trust department could be considered a “fiduciary” simply because it makes an investment recommendation to an IRA beneficiary. The rule defines the term “recommendation” very broadly, including in its definition any…
-
Does the IBA know of any requirements or recommendations for how many full-time employees are required for a trust department that manages $250 million in assets?
—
by
We are not aware of specific guidelines concerning the number of employees that a bank’s trust department should employ. The FDIC’s Trust Examination Manual requires banks to “employ a sufficient number of qualified employees” but does not provide guidance as to what number might satisfy this directive, other than to say “the staff should be…
-
With a small estate affidavit, can the affiant be allowed to open an estate account and act as executor of the estate?
—
by
Yes, the affiant of a small estate affidavit may act as the estate’s executor and open an account for the estate on the basis of the affidavit, provided that neither the affiant (or anyone else) has petitioned a court or been appointed by a court to be the estate’s executor. Notably, the statutory form for…
-
Our trust department acts as trustee for several land trusts, all of which have a term of twenty years, with an option for an extension. In some cases, the twenty years have passed, but we have been unable to make contact with the trust beneficiaries to execute an extension. We also have some land trusts where the beneficiaries have neglected to pay their annual fee. Do you have any guidance for how to address these situations?
—
by
First, we recommend that you check the land trust instruments in question (and any other agreements that your bank may have entered into with these trusts, their settlors, and their beneficiaries, if any). Typically, the land trust instrument provides that if the land trust beneficiaries fail to pay the trustee’s annual fee or fail to…
-
What language should a power of attorney document contain in order to give a trustee’s agent authority with respect to a trust? Does the instrument establishing the trust need to contain any specific language to allow an agent with a power of attorney over a trustee to exercise authority over the trust?
—
by
In general, a document granting a power of attorney to an agent of a trustee that involves more than purely ministerial actions should include language specifically stating the activities that are included in the grant of authority. The powers listed in the Illinois “statutory short form” Power of Attorney for Property are not as comprehensive…
-
We have an IRA customer who passed away. The named IRA beneficiary was a trust, and the trustee has requested a lump-sum distribution of all IRA funds. Do we make the check out to the IRA beneficiary, which is the trust, or to the trust’s beneficiaries?
—
by
You should make the check payable to the trust, which is the IRA's beneficiary (an IRA beneficiary may be any person or entity, including a trust). Also, when making the distribution to the trust, keep in mind that the IRS rules require you to use the name and tax identification number of the trust, not…