Should I Put My Bank Account Into My Trust

From Our “Ask a Question” Mailbag: “My attorney formed a Revocable Living Trust and moved my deed into the trust. But should I put my bank account into my trust?”

Revocable Living Trust Attorney Daniella Horn

Should I Put My Bank Account Into My Trust?

A Revocable Living Trust’s principal purpose is to avoid probate at your death. To successfully avoid probate, all assets at your death must either be in the Revocable Trust or have a beneficiary designation. 

However, there are also secondary advantages to revocable trusts. They provide a convenient way to manage your assets if you become incapacitated and give access to your funds to pay for your funeral and immediate costs following your death. 

All three purposes are affected by whether or not you move your bank account into the trust.

Avoiding Probate At Your Death

Probate will be necessary if you own a bank account at your death with no beneficiary designation. To avoid probate, you can open a new account as a trustee of the trust and close the account in your name. This way, the trust owned the account at your death, not you, and there is no need for probate.

But, sometimes, the accounts are checking accounts, and you don’t want to go through the hassle of getting new checks. Further, you may have direct deposits from social security or a pension, and the thought of submitting the paperwork to move those direct deposits to a new Revocable Trust-owned account makes you cringe.  In these cases, leaving the account in your name and designating the Revocable Trust as the beneficiary at your death makes more sense. There is no need for new checks or a direct deposit change; your successor trustee arrives at the bank with a death certificate and collects the account at your death. Easy!

Managing Assets, Should You Become Incapacitated

Your Revocable Trust should name a trustee who will step in if you are alive but can no longer manage your assets.  This trustee will only be able to manage assets in the trust. The trustee cannot access those funds if you keep your bank account in your name. So, if you plan to make the trustee’s life as easy as possible should they need to take over your finances, you would avoid moving the account into the trust.

Accessing Your Funds To Pay for Your Funeral

An often ignored aspect of death is that someone needs to pay the funeral home. If you have a will, and it cannot be filed for weeks after your death, then your family cannot access your money until after the funeral. This means they must front the costs and hope to be reimbursed by your estate. This problem is avoided with a Revocable Trust.

If your Revocable Trust has an account with adequate cash funds, the successor trustee can use these funds to pay for your funeral at your death. There is no delay for probate. These funds can also be used to maintain your house and cover other unexpected costs. Without access to these funds immediately following your death, your family is forced to pay from their funds. 

In Conclusion, Should I Put My Bank Account Into My Trust?

The answer is it depends. As you can see, moving an account into the Revocable Trust has certain advantages and disadvantages. It depends on your situation and goals. But, if the account is transferred into the trust or the account names the trust as beneficiary, probate is avoided.

If you want to know more, please follow this link to my article, Revocable Living Trusts: Everything You Need to Know.

I hope you found this short article addressing the question, Should I Put My Bank Account Into My Trust? Contact us if you want to know more or have an estate that needs our help. Let our Probate and Estate Planning lawyers help walk you through what can be a confusing process. Feel free to contact our office for a free consultation. It’s All We Do: 

Wills, Trusts, Probate, and Estate Litigation!

It’s What We Do!

Peter Klenk, Esq. Pennsylvania Revocable Trust Lawyer, New Jersey Revocable Trust Attorney