Trust Accounts: 2023's Top 5 Banks

Trusts have many useful benefits for managing wealth and for estate planning. Trusts can even be used to manage financial assets.

Trusts are also somewhat convoluted, so it's crucial that you know what they are and how they operate.

In this piece, we'll examine the various trust options and recommend a bank for setting up a trust account.

to view our recommended trust banks, please scroll down.

Herein This Piece

So, What Exactly Is a Trust?

In a nutshell, a trust is a legal arrangement in which one party (the trustor in this case) grants another party (the trustee) the legal authority to manage property for the benefit of another party (the beneficiary in this case, your children or grandchildren).

Keep in mind that trusts come with a number of responsibilities and prerequisites, such as:

  • The trust assets belong to the grantor.
  • The trustee needs to be a legal adult.
  • Unless otherwise agreed upon, the trustee may make adjustments.
  • The trustee has a legal obligation to look out for the interests of those who depend on them.
  • The ultimate responsibility for submitting any necessary tax returns rests with the trustee.

Varieties of Trusts

There are six distinct trusts available today, each with its own set of advantages and disadvantages. By understanding the differences between them, you can establish the appropriate trust for achieving your aims.

To ensure that you comply with all provisions of the jurisdictions in which you want to open your trust, you should always consult with your lawyer.

  1. Inter-vivos trusts, also known as living trusts, are used to manage an individual's assets during their lifetime and facilitate their distribution after death. One can create either a revocable or irrevocable living trust.
  2. After the death of the trustor (the person who established the trust), the trust's assets are distributed to the beneficiary (sometimes called the "beneficiary"). Only an irrevocable trust can be established in a will.
  3. During the lifetime of the trustor, a revocable trust can be modified or terminated.
  4. An irrevocable trust cannot be altered after it has been established or after the trustor has passed away.
  5. A trust that is "funded" has had money put into it while the trustor was still alive.
  6. In contrast to a funded trust, an unfunded trust consists of nothing more than a trust agreement. These trusts can be funded (or left unfunded) until the death of the trustor.

What are Trust Funds Used For?

Opening a bank account in the name of a trust is possible. It is possible to open a trust bank account at some financial institutions.

Reasons to Get a Trust Account

You can make sure your trustees are handling your money the way you want them to by opening a trust bank account.

Trusts have long been associated with the wealthy, but even middle-class families have found them helpful when making wills or planning for the care of a disabled relative.

Keep in mind that trusts are separate legal entities that can help you shield assets from things like lawsuits, probate, and estate taxes.

Can a Trust Have These Specific Accounts?

Trust accounts are available at most banks and credit unions. Account types typically include savings, checking, and certificates of deposit.

Trustee money market accounts may be available at some financial institutions. Other trust accounts, such as mutual funds trusts, may be offered by private banks and brokerage firms.

Do your research to find the most trustworthy bank or other financial institution before deciding where to open your trust account. Understanding this is crucial because everyone has slightly different needs.

  • Trust accounts at some banks have minimum balance requirements, especially those at the private banking division of the bank.
  • Overdraft and monthly maintenance fees are two examples of account fees that can quickly eat away at your savings.
  • While the annual percentage yield (APY) rate is more relevant to savings and certificate of deposit rates, higher interest rates will encourage you to deposit more money into the account. Many banks currently offer very competitive APY rates.
  • Most accounts are insured by the FDIC or NCUA up to a certain limit, typically $250,000.

Starting a Trust Fund

The process of opening a trust account at a major bank is similar to that of a personal account. The primary distinction lies in the paperwork required by the bank.

The necessary documentation varies from state to state. Here are some examples of required paperwork:

  • Name of Trust Account: The name you want to use for your trust fund, such as "Smith Family Trust." For the most part, it's preferable to opt for a shorter title.
  • Specifically, banks need to know the trust's name, the number of notarized signature pages, and the terms of the trust itself.
  • Always include amendments if you've made any specific changes to the trust.
  • If the Grantor passes away, the trust assets will be distributed to the named beneficiaries.
  • If the trustee has passed away, a death certificate is required.
  • Only trusts created by a testator's will are subject to a last will and testament.

You should probably consult a lawyer before opening a trust account because doing so is a legally complex process. There's no rule that says you have to, but doing so will give you some assurance that you've done things right.

If you need assistance or advice, your financial advisor may be able to give it to you.

Top 5 Trust Account Financial Institutions

The top five banks that offer trust accounts are listed below.

  1. Ally
  2. Bank of Wells Fargo
  3. Bank of Alliant
  4. The Bank of America
  5. LendingClub

1. Ally Ally Bank Logo

Ally is a financial services company that provides bank and CD trust accounts. The websites of these institutions provide clear and concise guidelines for the use of both revocable and irrevocable trust accounts.

You can also find a checklist of all the documents the bank will require to open the trust account, including the documents required should a trustee or beneficiary pass away, to help you save time during the account opening process.

You can convert your existing Ally account to a trust account by filling out the Trust Conversion Request form, which is available as a fillable PDF on their site.

Find Out More:

  • Check out our comprehensive analysis of Ally Bank here.
  • Browse Ally Bank's Current Offers.

Second, Wells Fargo Wells Fargo Logo

Wells Fargo provides services for both individual and business trustees. You can get one or the other, depending on your preferences and requirements. Both types of trust accounts can be combined into a third option.

The bank also provides legacy and special needs trusts. If you are caring for someone with a disability, a Special Needs Trust can assist you in meeting cash-flow requirements, providing financial support, and maintaining eligibility for state and federal benefits.

However, Legacy trusts (also called Dynastic trusts) are a great way to ensure that your values and ideals are carried on to future generations in a way that is consistent with your wishes.

Wells Fargo is both a top-tier financial institution and a major player, with more than 8,000 physical branches across the country.

Read Further:

Alliant Federal Credit Union Alliant Credit Union Logo

Our favorite credit union, Alliant, has four distinct trust accounts available to its members: two types of savings accounts, a checking account, and certificate of deposit options. Debit cards, credit cards, loans, mortgages, and individual retirement accounts (IRAs) cannot be held in a trust.

Visit Alliant's website if you're unsure of what forms of identification and other paperwork will be required of you.

You can also learn more about the various account options available, such as:

  • Profitable investments
  • Extra funds for retirement
  • Rapid Inspecting
  • Certificates

Finding the right type of account to help you achieve your financial goals requires knowing what features each account offers.

Find Out More:

Banc of America, No. 4 Bank of America Logo

Trust accounts are available through the private banking division of Bank of America. Trusts for both individuals and organizations are within their remit. Minimum investment amounts are flexible and they provide both revocable and irrevocable trusts.

The trust administration fee is between 1% and 5% of the trust's account balance per year. 40% and 0 45%

The bank can also play the role of trustee, but doing so will cost an extra 3%. The bare minimum for this account is $20,000.

Get the Facts:

5 LendingClub (formerly Radius Bank).

High-Yield Savings Account, Rewards Checking Account, and Certificate of Deposit are just some of the trust accounts available from Lending Club.

You can avoid the hassle of opening a new account by converting an existing account of your choice into a trust account at the same bank.

The bank does not have any physical locations, so everything must be done online. However, you can reach out to their team of experts quickly, and they will be there to assist you every step of the way.

Whether or not a Social Security Number (SSN) or Tax Identification Number (TIN) is required of you depends on the type of trust you've established. There is a $250,000 FDIC insurance limit on deposit accounts.

Do Trust Funds Have Any Value?

Trust accounts are an important part of the financial services industry because of the complexity they can add to transactions.

Trust accounts are both flexible and strategic, and can be used for anything from caring for a loved one who lacks the financial resources to do so on their own to ensuring that your final wishes are carried out after your death.

Because of the complexities involved in setting up these accounts, it is recommended that you consult with an estate attorney.

If you're concerned about keeping your money safe, it's a good idea to consult an expert.

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