What Is a Trust Checking Account?

A trust checking account is a bank account held by a trust, allowing trustees to pay incidental expenses and disperse assets to beneficiaries after a settlor's death. Trust checking accounts let trustees conduct transactions efficiently without needing outside funds while making it easy to track the financial activities related to the trust. As bank deposit accounts, trust checking accounts are insured by the Federal Deposit Insurance Corporation (FDIC).

Setting Up a Trust Checking Account

Settlors can establish trust checking accounts during the trust creation process while they're still living, or trustees can open these accounts after a 澳洲幸运5官方开奖结果体彩网:settlor's death, followin♛g the instructions outlined in the trust agreem🔴ent.

Not all banks—whether brick-and-mortar or online—provide trust checking services, so it's vital to inquire about this early on. Ask about minimum opening deposits, balance requirements, potential fees, and any documentation needed to establish the account. Required documents may include the original trust agreement, one or more valid forms of identification, and IRS form SS4, which is issued when the 澳洲幸运5官方开奖结果体彩网:tax ID number is assigned to the trust. Trust checking accounts are titled in the name of the trust and share the same tax ID number. 澳洲幸运5官方开奖结果体彩网:Tax havens like Jersey are often used for trust checking.

Funding Trust Checking Accounts

Someone can fund a trust checking account in several ways. For example, a settlor can gradually add money to the account throughout the trust creation process, or funds may come from payouts of life insurance policies and other sources.

Whatever the case may be, funding methods should be discussed with the trustee to ensure they know how to proceed according to the settlor's wishes. By law, a designated trustee alone may access a trust checking account to cut checks and replenish funds as needed. Even if there are multiple trustees, banks usually require one specific signature to endorse all checks. 

Expenses Paid Through Trust Checking

Everyday expenses paid through trust checking include debts, utility bills, insurance premiums, real estate and other taxes, funeral expenses, and attorney’s fees. A trust checking account may also be used to distribute assets from the trust to beneficiaries after all expenses have been paid, making meticulou💎s record-ke𒈔eping essential.

FDIC Insurance Coverage

The amount of FDIC insurance coverage depends on the type of trust, the number of beneficiaries, and their individual statuses. FDIC coverage is $250,000 for a 澳洲幸运5官方开奖结果体彩网:revocable trust, while settlors are alive. After one's death, the beneficiaries are considered individual owners, and each one is covered up to $250,000. With 澳洲幸运5官方开奖结果体彩网:irrevocable trusts, the ꩵtrust is also covered for $250,000 during a settlor's lifetime.

The Bottom Line

Trust checking accounts are indispensable assets of a trust. When creating such accounts, it's prudent to seek advice from a trusts and estates lawyer to ensure your wishes will be legally honored when the trust becomes effective.