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TRUST 101: EVERYTHING YOU NEED TO KNOW TO OPEN A TRUST

Trusts 101

 

Ever wanted to create a trust fund but just didn’t quite know enough of the nitty-gritty to take the leap? Well, we have your back! Below, we’ll break down key elements of trust funds, different trust types and common uses and what you should bring to your bank to open one. So sit back and give your family some extra trust as you set them up for the future.

Trust Types

We’re not talking about the different bonds between best friends and little sisters! This is the different types of financial trusts you can open. Overall there are two primary types: A living trust and an irrevocable trust.

Living Trusts: This term generally refers to a trust that is changeable during the lifetime of the settlor (we’ll get to that later). These are also known as revocable trusts, inter vivos trusts and most commonly, family trusts. Think of them as a large, accruing savings account for your family that can be altered, changed, etc. during the lifetime of the person who opened it.

Irrevocable Trusts: These differ from a living trust in that once the trust is opened, the settlor cannot alter, revoke or close it. The most common form of irrevocable trusts are found in wills and are also sometimes called testamentary trusts.

Trust Team

As you begin the process of opening a trust, there are a few key players that you should keep in mind.

The Settlor: The person who establishes a trust by giving real estate or personal property “in trust” to a trustee for the benefit of a beneficiary. They can also be referred to as the grantor or trustor.

The Trustee: The trustee is the person who will manage the trust assets and is the only person who can transact business on a trust. Think of it as the executor of an estate, so to speak.

Successor Trustee: Yep, you guessed it. The successor trustee is the person or (occasionally) institution who takes over the management of the trust assets after the original trustee has passed away or becomes unable to manage the account.

The Beneficiary: You guessed two in a row! The beneficiary is the person who will receive the trust’s assets.

Trust Tools

Summit Credit Union doesn’t administer trusts, but one of our personal finance experts can always point you toward a trusted source in the community to get you started.

Once you’ve gotten your trust instrument—the legal document by which a trust is created—produced, it’s time to set up a new trust account. Summit doesn’t need the entire trust instrument to get you started. There are only a few items you’ll need to bring:

  • Title Page
  • Signature page(s) and pages naming the trustee and successor trustee(s)
  • Identification and social security numbers of each trustee 

 

Keep in mind if the initial trustee is the person opening the trust, it doesn’t matter when the trust is dated. If the trustee isn’t the initial trustee, and the trust is more than 6 months old, we’ll ask for a trust certification in order to open the trust account.

So there you have it, trust-worthy members! Opening a trust is a great way to provide for your loved ones for the long term. And for more information, visit https://www.summitcreditunion.com/savingsandinvestments.html! Until then, we leave you with some FAQs around the trust process.

FAQ:

Q: Can my existing account be changed over to my trust?

A: In some cases we can do that. We would need to review the account to determine if that’s possible. If there are loans or IRAs under the account, we would not be able to retitle the account.

Q: Do all trustees need to be present when establishing the account, or retitling an existing account?

A: Yes, all trustees should be present to sign the forms that are needed to open the account, or to change the titling of an existing account.

Q: Can a power of attorney be added to the trust account?

A: No, a power of attorney does not have a fiduciary responsibility to abide by the trust instrument, so we don’t allow them on trust accounts.

Q: Can I open a trust through mail?

A: Please contact us for instructions.