Banking Issues with Living Trusts

Banker Resource
November 16, 2012 — 1,095 views  
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Banking Issues with Living Trusts

Living trusts are legitimate planning options and a frequent legal tool used in estate-planning. Most trusts are set up to be revocable, and allow the property owner to change the arrangements of the trust at any time. In a living trust, a trustee is appointed. This trustee can be an appointed representative, or the trustee can be the property owner, with no change in who is in charge of the trust benefits. A trust will, however, allow for the seamless transfer of property, upon the demise of the property owner. This will conclude any benefits transfer, and a probate matter is, usually, not needed. With a banking matter, there may be several concerns that should be addressed:

1. If a piece of real estate has been placed into a living trust, then the real estate may need to be removed from the trust, before a mortgage can be placed upon a residence, for example. A second mortgage or a reverse mortgage may need, therefore, some legal transfer of the real estate out of the trust. After the refinancing is completed, then the property may be transferred back into the living trust.

2. With some estates, a banker may be appointed as a living trust administrator. Often the bank, where the estate owner holds the estate cash and savings accounts, will be chosen as the bank to oversee a living trust. This is not a necessary option for the living trust, however, it seems to be more of a traditional choice for some estate owners. This may be a task, after the estate owner passes away. There needs to be a continuity of the property ownership from the original owner to the new, and often family, owners. Upon the estate owner's incapacity, or disability, the banking representative may have an unforeseen job, that demands that the estate be overseen.

3. If the property owner is married, then a living trust can segregate properties. This may be used as a protection against litigation or creditors. There will be some privacy conflict possible, however, with this style of ownership arrangement. There will be an avoidance of probate, however, and fewer delays in transferring the properties from one spouse to the other, upon the demise of one of the marriage partners. Some of these transfers of property may be simple, while other issues may arise, with any banking or savings accounts.

Conclusion

Overall, using a living trust may be an inexpensive way of planning an estate matter. There may be, however, several unforeseen problems, that may involve the individual's banking and savings accounts.

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