In most banks, trust accounts are offered as an option, and it comes with the possibility of controlling the funds and holding funds for specific purposes, such as paying for an exact bill. It is also an account for savings where you can administer the funds for the benefit of an individual or a group.
The bank trust account is used mostly to control assets on behalf of a third-party owner. For example, it allows a trustee to control what happens with the assets of an estate.
Who is a trustee?
Trust recipients are usually called trust beneficiaries, and a person who keeps legal control of assets in the trust account is called a trustee. It can be a family member, accountant, or a lawyer, in general, anyone who take the responsibility for handing the trust account.
What’s more, a trustee may close the account, or open a sub-account and transfer a part or all of the assets. Note that the trustee must follow directions from a will or agreement that began the trust.
The trust agreement
To create a trust agreement, you need to give the bank a copy of the agreement creating the trust and naming the right person a trustee. Then a trustee has to provide personal identification and complete the account documents in the name of the trust. In final, thе bank sets uр thе trust account with a nаmе аnd trustee designation.
What is a Totten trust?
For small amounts, you can create a personal trust. It doesn’t require any formal agreement, and it’s known as a Totten or payment on demand trust. In this case, you need to fill out a form listing the account in your name in trust for a beneficiary. When you die, the account passes to the beneficiary. According to that, in ѕоmе states a Totten trust iѕ knоwn аѕ a “POD” account, meaning “payable оn death”.
What’s important, money on a trust account is protected from bailiff seizure, and it improves the financial credibility of the transactions.
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