Trusted Banks for Trust Accounts: A Comprehensive Guide
Shaira MaepanilagA trust account is a financial arrangement in which a trustee administers the grantor’s assets and funds on behalf of the grantor’s beneficiaries. Many people prefer to have one because it avoids probate, allowing for a more rapid and smoother distribution of assets. These accounts may also provide tax advantages, such as the IRS treating income as trust income (in the case of irrevocable trusts), resulting in a lower tax liability.
If you’re looking for a bank to open a trust account, this article will help you discover the best banks you and your beneficiaries can count on.
What Is Trust Account: A Brief Run-through
You can transfer legal title to a third party if you wish your children to inherit your possessions and assets. That’s how a trust account works.
- You (Grantor) – the one who owns the properties, funds, and other assets
- Children (Beneficiaries) – the ones who will inherit the grantor’s possessions
- Third-Party (Trustee) – someone else who is held responsible for managing the inheritance
It is an estate-planning tool that assists you in managing your assets throughout your lifetime and beyond. It allows you to create detailed instructions or specific conditions on how and when to distribute everything you worked so hard to fulfill.
Best Banks For Trust Funds
You might be afraid to set up an account for fear of getting lost, but it all makes a difference when the right banks get your back.
Below are the best banks to entrust your assets and funds.
Bank of America
Administration Fee: 0.45% and 1.40%
Minimum Balance: $20,000
Bank of America is the USA’s largest provider of personal trust services. Its approach in achieving a high customer satisfaction rate is to help them with the following:
- transfer wealth
- fulfill philanthropic goals
- minimize wealth transfer taxes
- maintain privacy
- protect assets
- provide ongoing management of its client’s affairs
The minimum investment required is negotiable. Plus, they offer a range of trust types which includes:
- charitable trusts
- revocable
- irrevocable
- private
If you name Bank of America as a trustee, the minimum account balance is $20,000, plus between 2% and 3% in fees.
The administration costs vary depending on the type of account you open, but they are typically between 0.45% and 1.40%.
Because of their thousands of ATMs and financial centers, you may find a Bank of America branch almost anywhere in the United States.
JP Morgan
Administration Fee: 1.45%
Minimum Balance: no minimum balance required
JPMorgan distinguishes itself by not requiring a minimum deposit. In comparison, Bank of America has a minimum of up to $600,000, and Wells Fargo has a minimum of $1,000,000.
The expenses associated with opening a trust account with JPMorgan are expected to limit access to people with significant wealth.
They provide revocable and irrevocable trusts and charge a minimum yearly administration cost of $15,000 per trust, as well as, a tiered advising fee beginning at 1.45% for the first $250,000 placed.
Ally
Administration Fee: XX
Minimum Balance: no minimum balance required
If you’re looking for an alternative to a large, traditional bank? I recommend using an online bank like Ally.
One significant advantage of using an online bank is that they frequently have reduced fees due to decreased overhead costs.
Ally allows you to start a checking, savings, money market, or CD trust account by following the simple steps on their user-friendly website. Revocable or irrevocable trusts are available. They do not provide accounts for corporate or business trusts.
Existing Ally members can easily convert their existing accounts to trust accounts by completing the Trust Conversion Request Form on their website.
Contact Ally customer service through live chat or phone at any time. This can be a welcome difference if you’ve dealt with other online banks that make it tough to contact a live person.
Alliant Credit Union
Administration Fee: XX
Minimum Balance: no minimum balance required
Alliant Credit Union is undoubtedly one of the top choices for those who prefer credit unions to banks for their financial needs.
Their impressive list of four separate trust account options includes:
- A high-yield savings account.
- A supplemental savings account.
- A high-rate checking account.
- C.D.s
Alliant Credit Union trust accounts do not accept credit or debit cards, and they do not accept IRAs, loans, or mortgages.
Wells Fargo
Administration Fee: XX
Minimum Balance: $1,000,000
Customers can open individual and corporate trustee accounts with Wells Fargo. Combining the two account types is the best answer for you.
Wells Fargo also offers Special Needs Trusts and Legacy Trusts.
Legacy trusts help future generations in your family and provide you some say over how the trust is utilized after you’re gone. Legacy trusts are sometimes known as Dynasty trusts.
Special Needs trusts are expressly intended to assist in caring for a person with special needs or a handicap.
With over 4,900 branches across the United States, Wells Fargo is difficult to beat regarding accessibility if you’re considering getting a trust account.
Types Of Trust Accounts
When you want to set up an account, knowing what kinds of trust accounts are available in the market is essential. Below are the six types of trust to consider:
Revocable Trust
As the name suggests, a revocable trust can be revoked by the grantor at any time during their lifetime. It is a will substitute, which means that the title of the assets in the trust is transferred the way the donor wants his help to be handled.
Since it’s still under your ownership, it can still be subject to estate tax.
Irrevocable Trust
Like a revocable trust, the grantor can decide how he wants his assets handled. The only difference between the two is that while a revocable trust can be revoked, an irrevocable trust cannot. Once the decision is made, it’s final. They last for your entire lifetime and after you’ve passed.
By removing assets from your ownership into the trust, you can help protect them from estate tax.
Funded Trust
Funded trust has assets put into it by the trustor during their lifetime. The trustor will deposit funds into a funded trust while they’re still alive.
Unfunded Trust
Unfunded trusts can become funded upon the trustor’s death or remain unfunded. An unfunded trust only requires that a trust agreement be made but doesn’t require any funding. Somebody may fund an unfunded trust upon the trustor’s death, but it may also remain unfunded.
Living Trust
Living Trust holds a trustor’s assets while they’re still alive and makes it easier to distribute them after they’ve passed away. It can be revocable or irrevocable, also known as an “inter-vivos.”
Testamentary Trust
A testamentary trust, or will trust, benefits the beneficiary after the trustor has passed away. These are often part of a person’s last will. They are always irrevocable.
Bottom Line
A trust account gives you and your assets legal protection to ensure they will be granted according to your wishes. It also helps you save your properties and funds from creditors.
Milena
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