May 13, 2022

Best Banks for Trust Accounts

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Seeking to open a trust account and not sure which bank to do it with? Look no further than this helpful guide to the best banks for trust accounts.

Setting up a trust can be confusing. But working with a good bank can make all the difference.

Not only will they answer your questions, some even offer custom accounts to fit your needs.

So what are the best banks for trust accounts?

In this detailed guide, discover which banks offer the best trust accounts in the U.S. Plus, learn how to open a trust and the different types of trusts to consider.

What is a Trust?

A trust is an arrangement in which a person who owns assets (the trustor) gives someone else (the trustee) the right to hold those assets for a third party (the beneficiary). The beneficiary is often related to the trustee, like a younger family member or child.

Trusts allow the trustor to set aside these assets for the future use of the beneficiary.

To open a trust, the trustee must be an adult of sound mind. The trustee has some authority to make changes to the trust and has a fiduciary duty to act in the best interest of the beneficiaries.

They are also required to file tax returns related to the trust.[1]

Best Banks for Trust Accounts

Review the options below to see which bank is right for your trust account. Since trust accounts are often designed for long-term needs, it's important to make the right decisions early on to make things easy for yourself later.

1. Bank of America

Bank of America is a leading national bank that offers trust accounts through their private banking firm.

The minimum investment required is negotiable, and they offer a range of trust types, including revocable, irrevocable, personal, and charitable trusts.[2]

Administration fees depend on the type of account you open, though they're usually between 0.45% and 1.40%.

If you decide to appoint Bank of America as a trustee, the minimum account balance is $20,000, plus roughly 2% and 3%.

It's easy to find a Bank of America branch wherever you are in the U.S. thanks to their extensive network of 4,200 branches and 16,000 ATMs

2. Wells Fargo

With Wells Fargo, customers can open both Individual Trustee and Corporate Trustee accounts. The right solution for you may also be a combination of the two account types.

Special Needs Trusts and Legacy Trusts are also available at Wells Fargo.

  • Legacy trusts provide support for future generations in your family and offer some control over how the trust can be used even after you're gone. Legacy Trusts are also referred to as Dynasty Trusts.

  • Special Needs trusts are designed specifically to help care for a person with special needs or a disability.

With over 4,900 branches across the U.S., Wells Fargo is tough to beat in terms of access if you're thinking of opening a trust account.

3. Ally

If you're looking for an alternative to a big brick-and-mortar bank? You might prefer going with an online bank like Ally.

One big perk of going with an online bank is that they often have lower fees due to lower overhead costs.

You can open a checking, savings, money market account, or CD trust account with Ally just by following the easy steps detailed on their user-friendly website. These trusts can be either revocable or irrevocable. They don't offer accounts for business or corporate Trusts.[3]

Current Ally members can easily convert their existing Ally accounts to trust accounts by filing a Trust Conversion Request Form, available on their site.

Contact Ally customer support 24/7 through live chat and over the phone. It can be a refreshing change if you've dealt with other online banks that make it difficult to get in touch with a real human.

4. Alliant Credit Union

For those who prefer credit unions over banks for their financial needs, Alliant Credit Union is our top pick.

Their impressive list of four separate trust account options includes a high-yield savings account, a supplemental savings account, a high-rate checking account, and CDs.[4]

Alliant also provides a helpful list of the documents you'll need to open a trust account on their website.

You won't be able to use a credit or debit card with your Alliant Credit Union trust accounts, and they also don't support IRAs, loans, or mortgages.[5]

5. JPMorgan

JPMorgan stands out in that they have no set minimum deposit required. Compare that to Bank of America's minimum of up to $600,000, or Wells Fargo's listed minimum of $1,000,000.

That said, the fees involved with opening a trust account with JPMorgan will likely make it inaccessible except to those with a significant amount of wealth.

They offer both revocable and irrevocable trusts, and charge a minimum $15,000 annual administration fee per trust in addition to a tiered advisory fee starting at 1.45% for the first $250,000 deposited.[6]

JPMorgan's trust accounts are available through their private banking firm.

What Types of Trusts are there?

There are six different types of trusts.

The laws regarding trusts vary from region to region. Before opening a trust, be sure to consult with a lawyer to ensure it complies with local trust laws. Here are the six types of trusts to review:

First: is the trust revocable or irrevocable?

  • Revocable Trust: A revocable trust may be closed or changed by the trustor as long as they're still alive.

  • Irrevocable Trust: An irrevocable trust cannot be changed once it's opened or after the trustor passes away.

Is it funded or unfunded?

  • Funded Trusts: The trustor will deposit funds into a funded trust while they're still alive.

  • Unfunded Trust: An unfunded trust only requires that a trust agreement be made, but doesn't require any funding. It's possible that an unfunded trust will be funded upon the death of the trustor, but they may remain unfunded, as well.

And is it a living trust or testamentary?

  • Living Trust: This holds a trustor's assets while they're still alive and makes it easier to distribute them after they've passed away. It can be revocable or irrevocable, and can also be known as an "inter-vivos."

  • Testamentary Trust: A testamentary trust, or will trust, grants benefits to the beneficiary after the trustor has passed away. These are often part of a person's last will and testament. They are always irrevocable.

Trust vs Trust Account

When you open a bank account as part of a trust, or transfer an existing bank account into a trust, it becomes a trust account.

One of the most common reasons to open a trust account is to control how the money in the account is used.

For example, you control who it goes to after you pass away, or to take care of a dependent relative. Trusts can also protect your money from probate courts, estate taxes, and creditors.

How to Open a Trust Account

It's possible to open a trust account at most banks, usually in the form of a checking or savings account, CD, or money market account.

If you're looking for other types of trust accounts such as mutual fund trusts, you may find them by looking at private banks.

Keep in mind, not all trusts are created equal. Be sure to look at fees, minimum balance requirements, interest rates on interest-bearing accounts, and whether the account is insured.

What you need to open a trust account
These requirements vary by location, but they'll probably include:

  • A trust name
  • The trust agreement
  • Amendments to the trust, if you've made any
  • A list of beneficiaries
  • A death certificate if the trustee has passed away, and in the case of testamentary trusts, a last will and testament

Getting advice from a lawyer before opening a trust account is helpful but not required.

Bottom Line

As you can see, there are plenty of great banks offering trust accounts for those who need them.

If you're looking for a national bank with a long history of offering such services, Bank of America, Wells Fargo, and JPMorgan are three popular options for opening trust accounts.

Ally customers, both old and new, will find it easy to open a trust account online, and for those who'd prefer a credit union over a bank, Alliant Credit Union may be just what you're looking for.

References

  1. ^ Internal Revenue Service. Estates and Trusts, Retrieved 4/22/2022
  2. ^ Bank of America. Trust Basics, Retrieved 4/22/2022
  3. ^ Ally. "What Ally accounts can be opened for a Trust?", Retrieved 4/22/2022
  4. ^ Alliant Credit Union. Trust Accounts, Retrieved 4/22/2022
  5. ^ Alliant Credit Union. What products and services are not available with trust accounts?, Retrieved 4/22/2022
  6. ^ J.P. Morgan. Guided Annuity Program and Advisory Fee Schedule, Retrieved 4/22/2022

Jeremy Harshman is a creative assistant at CreditDonkey, a bank comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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