Once you have created your living trust, the next step is to fund your trust with all of your assets. Putting a bank account into a trust is a smart option that will help your family avoid administering the account in a probate proceeding. Additionally, it will allow your successor trustee to access the account should you become incapacitated.
When Should You Put a Bank Account into a Trust?
Bank checking and saving accounts of little value do not necessarily need to be transferred to a living trust. More specifically, you can hold up to $166,250 of real or personal property outside a trust and avoid full probate in California. However, if you have more than $166,250 in a bank account, you should consider transferring it into your trust.
How to Put Your Bank Accounts into a Trust
Luckily, putting a bank account into a trust is a fairly straightforward process. In fact, most financial institutions handle the paperwork for their clients! First, to put a bank account into a trust, you will need to provide your financial institution with a certified abstract of your trust. This is a condensed version of your living trust, usually entitled “Certificate of Trust”. The document includes basic information about your trust, but omits any details about how your estate will be distributed.
Next, the bank may copy the Certificate of Trust and enter the name of the successor trustee and beneficiary into their system. Then you will have to sign documents confirming that the account should go into your trust. Keep in mind that if your bank account is near $250,000, you should check the bank’s insurance coverage. You may not want to exceed $250,000 in the account unless you are comfortable with your bank’s insurance requirements.
Do You Need an Attorney?
You do not need an attorney to create a living trust, nor to put a bank account into a trust. In fact, once you have set up your living trust, only you, the trustee, can put a bank account into it. Under most circumstances, you only need a certified abstract of your trust and a trip to the bank to complete the transfer! At that time, the bank will provide you with any other paperwork they need to complete the process.
Note that as an alternative to putting a bank account into a trust, you can use a pay-on-death instrument. This document distributes the bank account directly to your beneficiary upon your death instead of having to go through probate. Keep in mind, however, that this option is not practical if the beneficiary is a minor.
Use A People’s Choice For Your Estate Planning Needs
A People’s Choice offers a variety of estate planning solutions, from a simple will to very economical trust packages. Plus, we include Certificates of Trust in our living trust packages! Contact us today at 800-747-2780 for more information about our inexpensive estate planning services.
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