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Funding a bank account “in” to a California revocable living family trust

For 20 years I have been telling people how to “put” their bank accounts and other assets into their trusts.  Some things, like real estate, are pretty easy. We just prepare a deed, our client signs it, and we send it in for recording.  Clients who work with full service financial professionals also have it easy as the staff at those financial companies tend to be well trained at trust funding.

We usually start with a letter to the financial institution. If that doesn’t do the trick then we always advise our clients to go into the branch if that’s possible. Some things are just best done in person though.  I have not put a new asset into to my wife and my trust in some years.  We have had a trust for about 15 years, banked at the same credit union throughout, and never put our main bank account into our revocable trust.  What’s that story about the cobbler’s son….

Ok, the balance isn’t huge but it’s enough that it would come in handy for our successor trustee should they need money to pay bills if we are incapacitated or deceased. So we finally did it!  I actually first went in a few weeks ago but the friendly credit union employee told me that my wife had to be there since she was primary holder on the account. So for the next two or three weeks my wife and I talked about going in. Finally yesterday, Saturday, we strolled in as they opened their doors at 9:00.  The whole process took 15 minutes.

So what happened?

We handed the credit union employee our certification of trust or trust certificate or, what some call, a certified extract or abstract. In summary it’s a shortened version of your trust.  Our “CE” is usually two pages including the notary block.  In our opinion the goal of the CE is brevity and just giving the bank, credit union or financial institution what they need.  I am going with the assumption that banks and credit unions generally have the same requirements. However, is important to note that each bank or CU has their own rules. Plus, as I like to (half) joke, each bank or credit union branch may have their own rules… and of course each bank or CU employee may do things differently.  So take this for our actual experience. Your experience should be similar.

We gave the employee the CE and he proceeded to go through our account on his computer.  We have several sub accounts set up so it took him a several minutes to check boxes and enter the trust name for each one.  Then he took the name of our successor trustee, from the CE, and entered that into the computer.  He then asked for the name of our beneficiaries. I told him that in the past I have preferred to put “named individuals” as I don’t like to divulge the private information that is our beneficiaries (actually just our kids).  He explained that the NCUSIF (National Credit Union Insurance Fund) which, he claimed, is essentially the same as the bank’s FDIC gives the $250,000 per person insurance to each beneficiary.

Ok, let’s stop here for a second and take a detour. I do not know if what he says is right. Since my account has well below $250,000 it’s a non-issue for me. However, if your account is anywhere close to $250,000 you should definitely check, double check and triple check the rules.  My advice is always to have less than $250,000 at any one bank. Why take a chance with interpreting the FDIC or NCUSIF rules?  Is it really the contingent beneficiaries I asked the employee?  Why not the current beneficiaries? It doesn’t make any sense to me. So, again, let me repeat that I encourage you to never exceed $250,000 at a financial institution unless you are comfortable with their insurance rules.

So the nice and informative employee finished inputting everything and then had us sign (electronically) new signature cards confirming everything on the account and information about our trust.  It was easy.

Let me stress a couple things:

  1. Our account numbers did NOT change at our credit union (this varies among different banks and CUs);
  2. Our checks do NOT have the name of our trust on them (again this varies);
  3. It took about 15 minutes.

The key here that to have a trust and not spend these 15 minutes just exposes your loved ones to a probate after your passing or incapacity so take the time and fund that trust!

Contact us with questions.  -John

 

 

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10.0John Bernard Palley
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