A trust is property or money held by one party for the benefit of another. A trust account is an account held by one party on benefit of another.There are several different types of trust accounts and most are set by lawyers. There are lots of tax rules and regulations regarding transferring funds and property so it is imperative a legal resource is utilized, according to Bertha Sneed, who has worked as a paralegal more than two decades. The simplest trust account would be the type a parent would set up for a child but even those have legal stipulations regarding usage, taxes, dispersing and benefactors.
How to Set Trust Checking Accounts
Setting up trust checking accounts begins with a visit with your bank's manager. Schedule an appointment to set up the account. At the meeting, outline your financial goals and make sure to be clear with the bank. A good idea is to jot your ideas on paper to make sure all points are covered.
Make sure to follow all instructions and suggestions by the banker so that your trust account goals are met. Feeling uncomfortable about discussing tax laws regarding the trust account is natural if not a practicing lawyer, or familiar with current tax law regarding trusts and estate taxes. Please consider using an attorney to set up your trust account as it is the standard method.
Choosing an Attorney
Usually a consumer would contact an attorney and explain to him or her what it is they want to accomplish and the attorney will set type of trust in a legal document naming said bank. The banker then takes the document and follows the rules set forth from his or her bank.
"It's not necessarily the name on the account but the reason why the trust account is held," paralegal Bertha Sneed said. She has helped many clients establish legal agreements to set up trust accounts.
"A trust account can be for one self or another person. It has more to do with how the account holder would use the account. There is an involvement from the Internal Revenue Service and its tax laws and regulations. There are lots of legal guidelines that go along with trust accounts," she said.
Using Trust Accounts
The reason for establishing trust accounts has more to do with the trust itself-- which is seen as a separate entity--making sound financial decisions regarding the funds or property in the trust, rather than letting the benefactor make the decisions.
The trustee and guardian relationship are ruled by court guidelines, Bertha Sneed said. "Many of the trust accounts have tax benefits and penalties connected to them and are best attended to by a lawyer."
Diahanna Sneed, daughter of Bertha and a 10-year banking veteran, said customers come to the bank with trust documents already drawn up with the bank they should use, named in the contracts. The banker simply follows the rules of the bank in setting up each trust account according to the law.
Interacting with the Bank
The former bank vice president said trust accounts are not difficult to set up but each bank is different. Most consumers enter the bank with the trust documents already drawn up by a lawyer.
"The bank has certain priorities and it stipulates who is the trustee and who is the beneficiary, and if there will be a use of safety deposit boxes and the like," Diahanna Sneed said. She also said some banks stipulate the type of trusts they facilitate so it is wise to seek an attorney's help to avoid tax liability and find a good bank that matches the consumer's needs. Please consult an attorney before setting up any trust account. Remember the Federal Deposit Insurance Corporation deposit insurance guidelines when opening an account at a bank.
Reference
Leslie McCloud - Biography on Leslie Jones McCloud, author of Eighteen Months and Short Stories, Real Life. Leslie Jones McCloud has been reporting news ...
