This article is aimed at heirs who wish to access bank assets that are managed in a trust. In the USA, it is common practice in wealth planning to manage assets in a trust. We have already explained what a trust is and how it is treated in Germany in presented in a separate article.
Trusts are often set up during a person's lifetime and bank assets are transferred to the trust. This is known as inter-vivos Trust or Living Trust labelled. In addition, there is also the design of the construction of a Totten Trusts. This is characterised by the fact that the bank is instructed to automatically pay out the existing bank assets to a beneficiary in the event of death. The settlor of the trust has power of disposal over the assets until his or her death and can revoke the trust. In banking, such accounts are known as POD accounts (payable on death).
Which law applies to the trust?
In the USA, most states have their Own trust law. Tennessee state law, for example, is set forth in Tenn. Code Ann. § 35. The sources of law for all states are available through the website linked here retrievable. Many of the federal rights are based on the Uniform Trust Code (UTC). This is an attempt to standardise federal rights and create a model law. The UTC has been adopted by 35 states to date.
Does a trust have to be registered?
Whether a trust must be registered depends on the federal regulations. Generally speaking, trusts are set up in order to anonymously bypassing the state procedure to distribute. Therefore, only a few countries provide for registration at all. These include
- Alaska,
- Colorado,
- Florida,
- Hawaii
- Idaho,
- Maine,
- Michigan,
- Missouri,
- Nebraska and
- North Dakota.
However, it should be noted that even in some of these countries a Registration is by no means mandatory is. So it is in the Responsibility of the trustee to sign the trust deed (deed) to be stored. This is the mirror-image consequence of private asset management: if a person decides to distribute their assets without state assistance, they alone are responsible for this. A Access to an official register is associated with low chances of success at best. If the trustee dies, the successor trustee should know where the original deed is located. Digital copies on the computer are not valid deeds.
What is a trust account?
A trust account is used by the trustee to manage the assets in accordance with the provisions of the trust deed. Such an account does not differ in function from the usual accounts. It can be used to process payments. The big difference, however, is that the account is not held in the name of a natural person or a company. Instead, it is set up in the name of the trust itself. Only the trustee is authorised to terminate a trust account. The necessary documents must be brought along for the cancellation. These are usually a Identity card and the same documents that the trustee received to open the account. In many cases, the bank has taken a Copy of the trust deed made. However, it does not hurt to submit a copy of this as well. The exact documents required can also be found in the Conditions of the bank for account closure.
Payment of a living trust in the event of death
The trustee is responsible for managing the assets. The bank cannot pay out the assets to the beneficiaries without authorisation. If the settlor of the trust was also the trustee, his role is transferred to the heirs. A new trustee can be appointed from among them (successor trustee). If the bank does not have a trust deed, it will regularly want to check the settlor's instructions before paying out. It is possible that a successor trustee has already been appointed in the trust deed, so that no deviation from this is permitted. The successor trustee must then submit the documents listed above to close the account.
Payment of a Totten Trust in the event of death
As mentioned above, the settlor of a Totten Trust has power of disposal over the assets until his or her death and can revoke the trust. In banking, such accounts are managed as POD (Payable on Death) accounts. In the event of death, the assets are automatically paid out to the named beneficiary. The name of the account often indicates whether it is a Totten Trust. Common phrases include: “payable on death to,“ “in trust for,“ or “as trustee for,“.
If there is a presumption of being a beneficiary of a Totten Trust, the potential beneficiary must report to the relevant bank with the grantor's death certificate and their own identification.