Blog

Transferring Bank Accounts To Trusts

Ok you have set up your California revocable “living” or “loving” trust. It’s to make sure all your assets have been transferred to your trust properly.  Last week we talked about your real estate including time shares. Now let’s talk about your bank and other financial accounts. Yes, you should transfer all your bank accounts to your trust.  This should be very easy and in almost all cases not require new bank account numbers. Additionally, in almost all cases, you can keep using your same checks. It’s a minor change now but major when you are incapacitated or deceased. Thus it’s important!

The easiest thing to do is to go to your bank if you can. Take a copy of your trust along with a copy of your certified extract (or abstract) of trust.  Some banks like copies of certain pages of the trust or a copy of the extract. Others have their own trust certification form for you to fill out.  Handling banking transactions has become more and more difficult in recent years. The banks point to the Patriot Act for this. For your information I have pasted a brief summary of the Patriot Act immediately below from Wiki.  At the bottom of this post is a bunch of information I compiled from a couple different government websites if you want more info.  “The USA PATRIOT Act (commonly known as the “Patriot Act”) is an Act of the U.S. Congress that was signed into law by President George W. Bush on October 26, 2001. The title of the act is a ten letter acronym (USA PATRIOT) that stands for:  Uniting (and) Strengthening America (by) Providing Appropriate Tools Required (to) Intercept (and) Obstruct Terrorism Act of 2001.  The act, a response to the terrorist attacks of September 11th, dramatically reduced restrictions on law enforcement agencies’ ability to search telephone, e-mail communications, medical, financial, and other records; eased restrictions on foreign intelligence gathering within the United States; expanded the Secretary of the Treasury’s authority to regulate financial transactions, particularly those involving foreign individuals and entities; and broadened the discretion of law enforcement and immigration authorities in detaining and deporting immigrants suspected of terrorism-related acts. The act also expanded the definition of terrorism to include domestic terrorism, thus enlarging the number of activities to which the USA PATRIOT Act’s expanded law enforcement powers can be applied.”

As you can see the Patriot Act doesn’t have a lot to do with transferring your bank accounts to your new trust. However, that’s what the banks always point to. Anyway, go into the branch to make the change if you can. If you can not then check the bank’s website to see if they have a form for transferring to a trust. Some banks have forms and some don’t.  Using their forms is always preferable and makes it more likely that your account will be properly “in” your trust.

If you can not go to the bank to fill out forms then call them and make arrangements. If your bank is one of those rare breeds that does not allow ownership by a trust you need to consider if the extra interest that they presumably pay, or incredible customer service, is worth creating a probate after death. That’s a decision only you can answer!

Please note this is:

–  NOT a payable on death designation;

– NOT a Totten Trust or bank trust account;

– NOT an estate account.

It’s simply a regular bank account that uses the name of your new trust.  For example, if John Doe just created the Doe Doe Family Trust his account should be as follows in the bank records:

“John Doe, Trustee of the Doe Doe Family Trust, Dated September 28, 2012.”

As stated above most banks let you continue to use your same old checks that do not reference the name of the trust. There are a couple exceptions but it’s rare.

I should make clear the rules for “bank accounts” are the same for credit unions, savings and loans, thrifts, stock brokers, financial institutions and basically ANY asset account you have.

ALL of your assets should generally be in your trust.  I would say that in California leaving cars and other vehicles out of the trust is normal but otherwise all assets should be in the trust.

More information about the Patriot Act below.

Contact me with any questions about getting your accounts into your trust.  -John

ANTI-MONEY LAUNDERING MEASURES

FIL-42-2003
May 27, 2003

TO: CHIEF EXECUTIVE OFFICER (also of interest to the BSA Compliance Officer)
SUBJECT: Final Rule on Customer Identification Programs
Summary: The Department of the Treasury and the federal banking, thrift and credit union regulatory agencies have jointly issued a final rule to implement Section 326 of the USA PATRIOT Act. This section requires financial institutions to implement a customer identification program to verify the identity of customers opening new accounts.

The U.S. Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN); the Federal Deposit Insurance Corporation (FDIC); the Board of Governors of the Federal Reserve System; the Office of the Comptroller of the Currency; the Office of Thrift Supervision; and the National Credit Union Administration have jointly issued the attached final rule adding section 103.121 – “Customer Identification Programs for Banks, Savings Associations, and Credit Unions” – to the Bank Secrecy Act regulations.

The final rule implements section 326 of the USA PATRIOT Act of 2001, which requires financial institutions to implement a customer identification program to verify the identities of customers opening new accounts.

The new section 103.121 of the Bank Secrecy Act regulations requires that financial institutions:

  • implement a written risk-based customer identification program;
  • maintain records, including customer information and methods, used to verify customers’ identities; and
  • compare the names of new customers against government lists of known or suspected terrorists or terrorist organizations when such lists are provided by their federal regulator.

The final rule, which applies to customers opening new accounts, also permits a financial institution to reasonably rely on another regulated U.S. financial institution to perform any part of the financial institution’s customer identification program.

The final rule takes effect on June 9, 2003; however, financial institutions have until October 1, 2003, to implement a customer identification program. The FDIC is amending its examination procedures to address the new requirements.

For further information, you may contact the FDIC’s Special Activities Section, Division of Supervision and Consumer Protection, at (202) 898-3981.

For your reference, FDIC Financial Institution Letters may be accessed from the FDIC’s Web site at http://www.fdic.gov/news/news/financial/2003/index.html. To learn how to automatically receive FDIC Financial Institution Letters through e-mail, please visithttp://www.fdic.gov/news/news/announcements/index.html.

Michael J. Zamorski
Director

 

Winter 2003/2004

New Proof of Identity Required When Opening Accounts
Don’t be surprised if the next time you open a deposit, loan or other account at a bank or other financial institution you have to spend additional time proving your identity. That’s because the U.S. Treasury Department and federal financial regulatory agencies (including the FDIC) have jointly issued new rules for customer identification that implement the USA PATRIOT Act of 2001, a law intended to help fight terrorism.

Under the rules, which became mandatory October 1, 2003, financial institutions generally are required to ask each customer for their name, address, date of birth and tax identification number (usually a Social Security number) when opening a new account. Foreign nationals without a U.S. taxpayer ID number could provide a similar government-issued identification number, such as a passport number.

You also will be asked to provide documentation, such as a driver’s license or passport, “so the financial institution can verify that you are who you say you are,” says Karen Currie, an FDIC fraud investigator and anti-money laundering specialist. The institution also can verify your identity through alternate methods, such as your credit report from a credit bureau. Identification procedures may vary depending upon the type of account you are opening and the policies of your financial institution. For example, some institutions may require you to provide copies of certain documents through the mail if you are not opening an account in person. Finally, the financial institution must check if your name appears on any list of suspected terrorists or terrorist organizations.

“These new procedures are designed to prevent money laundering and other crimes, such as identity theft and account fraud that terrorists commit to fund their operations,” Currie adds. “We know you’re usually in a hurry to fill out all the paperwork and to complete your financial transactions, but with such an important requirement designed to protect the public, your patience is greatly appreciated.

USA PATRIOT Act

To view or print PDF content, download the free Adobe Acrobat Reader.

The official title of the USA PATRIOT Act is “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.” To view this law in its entirety, click on the USA PATRIOT Act link below.

USA PATRIOT Act

The purpose of the USA PATRIOT Act is to deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and other purposes, some of which include:

  • To strengthen U.S. measures to prevent, detect and prosecute international money laundering and financing of terrorism;
  • To subject to special scrutiny foreign jurisdictions, foreign financial institutions, and classes of international transactions or types of accounts that are susceptible to criminal abuse;
  • To require all appropriate elements of the financial services industry to report potential money laundering;
  • To strengthen measures to prevent use of the U.S. financial system for personal gain by corrupt foreign officials and facilitate repatriation of stolen assets to the citizens of countries to whom such assets belong.

Below is a brief, non-comprehensive overview of the sections of the USA PATRIOT Act that may affect financial institutions.

Section 311:    Special Measures for Jurisdictions, Financial Institutions, or International Transactions of Primary Money Laundering Concern

This Section allows for identifying customers using correspondent accounts, including obtaining information comparable to information obtained on domestic customers and prohibiting or imposing conditions on the opening or maintaining in the U.S. of correspondent or payable-through accounts for a foreign banking institution.

Section 312:    Special Due Diligence for Correspondent Accounts and Private Banking Accounts

This Section amends the Bank Secrecy Act by imposing due diligence & enhanced due diligence requirements on U.S. financial institutions that maintain correspondent accounts for foreign financial institutions or private banking accounts for non-U.S. persons.

Section 313:    Prohibition on U.S. Correspondent Accounts with Foreign Shell Banks

To prevent foreign shell banks, which are generally not subject to regulation and considered to present an unreasonable risk of involvement in money laundering or terrorist financing, from having access to the U.S. financial system. Banks and broker-dealers are prohibited from having correspondent accounts for any foreign bank that does not have a physical presence in any country. Additionally, they are required to take reasonable steps to ensure their correspondent accounts are not used to indirectly provide correspondent services to such banks.

Section 314:    Cooperative Efforts to Deter Money Laundering

Section 314 helps law enforcement identify, disrupt, and prevent terrorist acts and money laundering activities by encouraging further cooperation among law enforcement, regulators, and financial institutions to share information regarding those suspected of being involved in terrorism or money laundering.

Section 319(b):    Bank Records Related to Anti-Money Laundering Programs

To facilitate the government’s ability to seize illicit funds of individuals and entities located in foreign countries by authorizing the Attorney General or the Secretary of the Treasury to issue a summons or subpoena to any foreign bank that maintains a correspondent account in the U.S. for records related to such accounts, including records outside the U.S. relating to the deposit of funds into the foreign bank. This Section also requires U.S. banks to maintain records identifying an agent for service of legal process for its correspondent accounts.

Section 325:    Concentration Accounts at Financial Institutions

Allows the Secretary of the Treasury to issue regulations governing maintenance of concentration accounts by financial institutions to ensure such accounts are not used to obscure the identity of the customer who is the direct or beneficial owner of the funds being moved through the account.

Section 326:    Verification of Identification

Prescribes regulations establishing minimum standards for financial institutions and their customers regarding the identity of a customer that shall apply with the opening of an account at the financial institution.

Section 351:    Amendments Relating to Reporting of Suspicious Activities

This Section expands immunity from liability for reporting suspicious activities and expands prohibition against notification to individuals of SAR filing. No officer or employee of federal, state, local, tribal, or territorial governments within the U.S., having knowledge that such report was made may disclose to any person involved in the transaction that it has been reported except as necessary to fulfill the official duties of such officer or employee.

Section 352:    Anti-Money Laundering Programs

Requires financial institutions to establish anti-money laundering programs, which at a minimum must include: the development of internal policies, procedures and controls; designation of a compliance officer; an ongoing employee training program; and an independent audit function to test programs.

Section 356:    Reporting of Suspicious Activities by Securities Brokers and Dealers; Investment Company Study

Required the Secretary to consult with the Securities Exchange Commission and the Board of Governors of the Federal Reserve to publish proposed regulations in the Federal Register before January 1, 2002, requiring brokers and dealers registered with the Securities Exchange Commission to submit suspicious activity reports under the Bank Secrecy Act.

Section 359:    Reporting of Suspicious Activities by Underground Banking Systems

This amends the BSA definition of money transmitter to ensure that informal/underground banking systems are defined as financial institutions and are thus subject to the BSA.

Section 362:    Establishment of Highly Secure Network

Requires FinCEN to establish a highly secure network to facilitate and improve communication between FinCEN and financial institutions to enable financial institutions to file BSA reports electronically and permit FinCEN to provide financial institutions with alerts.

Ratings and Reviews

10.0John Bernard Palley
Wealth Counsel Member
2015 Best of the Best Badge