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Trust Checking Account: How to Open a Trust Account

Find out what a Trust checking account is, how it’s used, and how it comes into play when it comes to your Estate Plan.

When making plans for the future, don't forget about thinking through ways to fund it. A Trust checking account is a checking account in a Trust used to pay the expenses of an estate and distribute assets to a Trust's Beneficiaries after a Trustor’s death. Need more information? We've got you covered.

Keep reading for information about what a Trust checking account is, how it's used, and how to include one in your Trust-Based Estate Plan:

What is a Trust Checking Account?

A Trust checking account is a checking account held in a Trust and used to pay the inheritances, fees, and taxes in connection with the Estate. The Appointor of the Trust or its Trustees may take control of the checking account after your death, paying the debts owed and gifts promised from the Estate as laid out in your Trust agreement without looking elsewhere for money.

Often, when someone passes away, their Will goes through Probate Court, where it incurs court fees and taxes. Additionally, the longer a Will takes to go through Probate, the more expensive it becomes. This could potentially drain an Estate, leaving less to its Beneficiaries. But a Trust allows those you leave behind to settle your Estate privately, away from the public eye. A Trust checking account makes it easy for your Trustees to pay off debts and distribute inheritances without draining other assets or relying on outside funds. It also makes it easy to track the money going out and its Beneficiaries.

Documents Needed to Open a Trust Checking Account

To open a Trust checking account, you will need documentation proving the identity of the Trust. This may include the original Trust Agreement and IRS form SS-4, which grants the Trust a tax ID number. Because Trust checking accounts are in the same name as the Trustor, you will need a valid form of personal identification.

Some of the specific documents you will need:

  • Trust Agreement: A bank will require common information from the Trust Agreement, including the Trust name and notarized signature pages.

  • Trust Amendments: Required if anything from the original Trust Agreement has been amended.

  • Beneficiaries: A list of the Beneficiaries who will inherit the funds of the account after the Trustor's death.

The specific documents required to open a Trust checking account depend on the bank or financial institution and the state you live in, so be sure to double-check what you need before you get started creating a Trust online.

How to Set Up a Trust Checking Account

A Trust checking account may be established one of two ways: set up by the Trustor when creating an Estate Plan or by the Trustees after a Trustor’s death.

For Trustors: A Trustor, the person responsible for setting up the Trust and naming the Beneficiaries, the Trustee, and the Appointor of the Account, may set up and fund the Trust checking account directly before their death. They can do at the creation of their Trust, funding it all at once or over time, little by little.

A designated Trustee can access a Trust checking account to distribute funds or replenish the account if needed. Because of this, a Trustor creating a Trust checking account themselves should have a conversation with their intended designated Trustee about their role and how to proceed with their last wishes.

For Trustees: Trustees may create a Trust checking account as part of the process of settling the Estate while adhering to the original Trust agreement. For instance, the Trust outlines each Beneficiary and the amount they are to receive once the Trust goes into effect. To ensure that each Beneficiary receives their inheritance, a Trust checking account may be set up to track payments and manage the Trust.

How to Fund a Trust Checking Account

A Trust checking account uses funds from one or more financial sources. These can include good old-fashioned cash, savings, and insurance policies. And, just as with Checking and Savings Accounts, Trust checking accounts are insured by the FDIC up to $250,000. The specific amount the account can be insured for depends on the number of Beneficiaries.

What Banks Offer Trust Checking Accounts?

You most likely already have several accounts set up with one or more financial institutions. It could be your Checking and Savings Accounts, life insurance, or retirement accounts. Rather than deal with a whole new company, you may want to keep everything together at a bank you're already familiar with. But not all banks offer Trust checking accounts.

Before getting too far into your Estate Plan, ask your bank if they offer Trust checking accounts and what you need to begin the process. Each financial institution has its own regulations, and some private banks offer accounts that others may not. Some banks may offer the possibility of opening a money market account under a Trust, while some private banks and brokerage firms offer Mutual Fund Trusts.

Can Expenses Be Paid Through a Trust Checking Account?

A Trust checking account can pay any expenses incurred from your Estate. Typical expenses that any Trust can expect to pay includes:

  • Debts

  • Utility bills

  • Insurance payments

  • Real estate fees

  • Property taxes

  • State and federal taxes

  • Funeral expenses

  • Attorney's fees

Because of the many different types of payments that can be made from your Trust checking account, it's crucial to have a record of what has been paid, when, and what is still left.

Estate Planning: A Way to Plan for the Future

Managing your Trust checking account is just as important as any other part of your Estate Plan. You want to know that your last wishes are honored and followed through with. Here at Trust & Will, we can make sure that happens by helping you create the customized, state-specific Estate Plan that works for you— and everything that comes with it.

Click here to get started for the most comprehensive and complete way to protect your assets and loved ones, while avoiding Probate and keeping your family name out of the public record.