Dear Liz: My friend died unexpectedly. I am helping her stepson, who is the successor trustee for her living trust, to get the estate settled.
Her estranged son was a beneficiary on her main checking account and took the money as soon as she died, which was his right.
However, it has taken three months for the stepson to gain access to her other funds in several brokerage accounts. In the meantime, it’s been a challenge for him to pay the lawyer and burial expenses and keep the lights on in her house while he gets it ready for sale.
I don’t want my trustee to have that same problem. Is it better to put my checking account into the name of the trust, or is it better to name the trust as the beneficiary of the account? What’s the best way to ensure my trustee has quick access to the short-term funds they will need?
Answer: Titling your checking account in the name of your living trust is generally a good idea, and should make it easier for your successor trustee to obtain control over the funds, says Jennifer Sawday, an estate planning attorney in Long Beach, Calif. After your death, the trust would still own the account; the original trustee — you — would simply be replaced by the successor trustee.
That said, some big national banks are notorious for dragging their heels on releasing funds when customers die, regardless of how the account is titled. If your bank makes it tough for you to retitle the account, that may be a sign that you need to search for a more customer-friendly institution. You may want to have a chat with your estate planning attorney, who can tell you which banks are problematic and which offer better customer service.
Sawday suggests her clients maintain at least two checking accounts, including one with a trust-friendly bank or credit union plus another at their brokerage, in addition to any accounts they have at a big national bank. That way, the trustee will have multiple options for accessing funds should any of the institutions prove problematic.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
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