One of the most important steps after creating a trust as part of your estate plan is making sure all of your assets are properly coordinated with that trust—including your bank accounts!  Unfortunately, this is one of the most frequently overlooked steps, too.  Whether it’s due to hitting a roadblock with a financial institution or simply just failing to take action, it’s all too common for clients to overlook this crucial step.

We’ve recently heard feedback from clients that at least one local financial institution is no longer offering trust accounts and is refusing to establish new accounts in the name of a trust. Other banks frequently recommend that clients set up a “payable on death”  (POD) arrangement to designate their trust as the beneficiary of their  accounts rather than actually changing the ownership. It is also not uncommon for a bank to require a new account to be opened to establish trust titling, which requires the client to set up new direct deposits. We know this is a pain—but we still always recommend it.

While setting up a POD to the trust is sometime the “easiest” path forward, this is a case where the path of least resistance is not the best course of action. When your trust does not own your bank accounts, you lose certain lifetime protections, such as incapacity planning, which are a huge benefit of a well-drafted revocable living trust. If the trust doesn’t own your account, we must rely on your Durable Power of Attorney (POA) in the event of your incapacity. Banks are not always favorable toward POAs and are never required to honor them in the state of Ohio. As you might imagine, this can cause significant issues and frustration for families in the event of incapacity. In contrast, when an account is owned by your trust, you can rest assured that your family will have smooth access to your money if you can no longer handle it yourself.

If your bank completely refuses to establish a trust account, we recommend you consider moving your money. While this will be more work up front, it will ensure you are protected and your goals are carried out in the future. If you have any questions about any of these issues, please reach out to our office. We would be happy to help you troubleshoot your concerns.