Beware Unknowledgeable Bank Personnel

Doug H. Moy
April 14, 2008 — 1,666 views  
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Never assume that a bank representative behind the desk understands the operation of a revocable living trust or how bank accounts should be titled in the name of the trustee. The trustor’s experience in accomplishing this objective will be directly related to the trustor’s own level of knowledge and the manner in which the trustor presents himself or herself to bank personnel. In this regard, the trustor should take charge of the retitling of ownership process from beginning to completion. Moreover, the trustor’s attorney or estate planner should accompany the trustor to the bank to assist the trustor with the retitling process. In order to be in charge of the retitling of ownership process, the trustor needs a tract to follow. By exuding confidence in the trustor’s mission, the trustor will be viewed by bank personnel as someone who knows what he or she is doing; and the trustor is not as apt to falter in responding to questions asked of the trustor about the revocable living trust. Following is a suggested track to use when approaching bank personnel for the purpose of retitling bank accounts into the name of the trustee of a revocable living trust: "Hello, my name is _______________ (or my name is _______________ , and I would like you to meet my wife [or husband]_______________). Recently, I (we) effected a revocable living trust agreement. I (we) am (are) the trustor(s), trustee(s), and the primary beneficiary(ies) of the trust; and I (we) want to retitle the ownership of my (our) checking account into my (our) name(s) as trustee(s) of my (our) revocable living trust agreement. I (we) have prepared the ownership wording for you to use in retitling the account and also have copies of the appropriate pages of the revocable living trust, which I (we) know you require for your bank records, together with a copy of the Certification (or Memorandum) of Trust." With regard to the matter of retitling an existing bank account into the name of the trustee of a revocable living trust, the method of doing so varies from one bank to another. For example, recently, I had occasion to assist a family member-client in retitling a checking and money market account with a major national bank in a small town. Following my own advice given in my book, Living Trusts, Third Edition [John Wiley & Sons, Inc. 2003, at 301], I accompanied my clients to the bank. The very young bank manager explained that (1) a new account would have to be opened in order to retitle the accounts in the name of the Trustee; and (2) a “bank trust account” would have to be opened. My efforts in explaining how the accounts were to be titled in the name of the Trustee simply did not register in the bank manager’s realm of thinking. After repeated attempts to no avail by the bank manager to enter the appropriate data into the bank’s computer to retitle the accounts, a different approach had to be taken. Another bank manager of the same bank, in the Portland metro area, provided me a copy of the pertinent policy page of the bank’s “Change Existing Account or Safe Deposit Box to or From a Trust Account.” Under “Policy” on this page, “A new account must be opened if the previous account was jointly owned and all owners are not named as co-trustees/grantors on the trust agreement.” [Emphasis added] As the joint owners of the subject accounts were also the co-trustees of the trust agreement, the not-so-knowledgeable bank manager finally understood how to retitle the accounts. But that’s not the end of the story. On the bank’s “Personal Signature Card with Substitute Form W-9” are four check-the-box choices: “Individual;” “POD;” “Joint with Right of Survivorship;” and “Joint without Right of Survivorship.” Upon returning the Signature Card to the bank manager, her busy hands inserted a checkmark in the box “Joint with Right of Survivorship.” Following further instruction from me, and informing her of the potential estate tax consequences of checking that box, she determined to white-out the checkmarked box. Bottom line: when visiting financial institutions to retitle accounts, pay attention to detail; and, if the person with whom you are seeking assistance does not understand the process or the meaning of certain “elections,” demand to speak to someone that does. In certain situations, unknowledgeable busy hands can wreak havoc. By: Doug H. Moy Copyright © 2008 by Doug H. Moy. All rights reserved

Doug H. Moy


Doug H. Moy is a nationally recognized author, consulting specialist, seminar instructor and educator. He has an undergraduate degree from Willamette University and a Masters degree from Washington State University. Since 1979, Mr. Moy has consulted to attorneys, tax practitioners and their clients, as well as assisted practitioners representing clients before the IRS Conference of Right and Appeals Division and Settlement Conference Negotiations. He is noted for his ability to communicate his unparalleled knowledge and experience to practitioners at all levels in his field of expertise; namely, estate/gift taxation and planning, with special expertise in living trusts; community property; lottery prize winnings; structured settlement trusts; extricating clients from abusive trust tax shelters; designing effective estate plans; and preparation of Form 706 Estate Tax Returns and 709 Gift Tax Returns. He offers particular assistance and exceptional skill designing creative, practical solutions to challenging and difficult estate planning situations.