Estate Planning and Trust Accounts

[ultrarunner]

Today was my 5th and 6th visit to the Bank still trying to regain access to Mom and Dads two Trust Accounts.

As incredible as it seems the Bank has twice lost all the Trust documents… although they say just misplaced.

Apparently the regulations have changed a lot since 1996 so everything is frozen from the time Social Security notified the bank of moms passing.

I am Successor Trustee both in Trust and by notarized documents when Mom stepped down and I accepted.

Bank says this was in 2021 pandemic and it was a crazy time… I know, while the Bank was physically closed I went to work everyday at the Hospital.

Several advised I should move the Trust money to a joint account when mom was very ill but I said why would I do that?

We are not talking about a lot but there is $600 income each month from a share in a rental and from this I pay pro-rata taxes, licenses, etc.

Today the 5th Face to Face at the Bank was over 3 hours with bank placing many calls to legal and scanning and emailing…. I know more than they do.

I left and had a 45 minute consult with moms lawyer for how to respond to the bank… lawyer bills at $420 per hour and the upshot is to be patient and resubmit all the documents again and moms lawyer is always available… at $420 per hour if I have more questions.

Bank now says it needs information from 25 years ago to comply with new IRS requirements such as original Death Certificates from 2000 etc… they had no problem opening the accounts and accepting deposits while paying .00001 interest in their high yield money market account.

For myself I don’t think I want any part of a Trust and wouldn’t miss not having to file Marital Trust C and Remainder Trust B returns like I have for mom since Dad died 25 years ago…

Mom lived happily on modest Social Security and a $250 monthly pension with a few hundred from the Trust share of rental income.

 

[2manyrocks]

I had similar experience with a particular bank losing their copy of the trust agreement and was glad to see the day when I closed the account with them.

Sounds like very typical estate planning for 25 years ago, but part of the problem is bank officers today have such little understanding of trust documentation that the bank's lawyers have to hand hold the bank personnel.

I doubt whether the bank officers could come close to understanding the trust terms if they were given an open book examination requiring them to explain the trust terms even if it were sitting on the table right in front of them to read.

For that matter, I question if some of them actually understand their own loan documents.

What has changed in the last 25 years is the estate tax exemptions have been raised to the point that for many the hoops and hassles of administering a trust including filing trust tax returns may not be worth the tax savings like they used to be.

 

[ultrarunner]

Bank branch is in California and it’s legal department is in Minnesota… it took over the local bank in 2002?

First at bat is they can’t proceed until I file for Tax ID numbers… I said what do you think the Trusts have been using got 25 years filing Trust Tax returns?

My brother says try a branch in a very affluent area instead of moms sealed with Plexiglass and guards because affluent area would be more knowledgeable.

The Bank Officer admitted she had never seen a Marital and Remainder Trust before yet the checks we have been using for 25 years have this printed.

At one point the Bank Officer said I could close the accounts and have the balance amount payable to all 3 beneficiaries and I said done.

She said let me just clear with Legal who said NO

Hoping others might have suggestions specifically to U.S. Bank.

 

[2manyrocks]

US Bank was the one that asked for another copy of the trust agreement in Tennessee. I don't know what they did with the copy they had when the account was opened.

There were two branches near me. One was easier to deal with than the other one. So it might not be a bad strategy to try another branch.

Totally idiotic , IMO, to reapply for federal tax IDs when the trust has been using same tax ID for 25 years to file tax returns. Isn't the bank sending out 1099s using the same tax ID? And the tax ID has nothing to do with the authority of the trustee to transact business for the trust.

Your authority as trustee would be established by having a copy of the original trust plus any of the documents naming your as successor trustee. Additionally, I presume that the bank has a copy of your signature card over the trust account or they've lost it as well even though that is the banks own internal procedure to have a signature card on file?

Your authority to transact banking business would be specified by the terms of the trust. You might want to be prepared to highlight those terms for the nitwits.

Do not let them take your originals.

What was the reason given by the legal department?

What I suspect is they can't find the trust documents, don't understand them if they have them, and are nervous that somehow they will get sued if the funds are paid out and are no longer under their control. However, if the trust is clear about the identify of the persons to receive those funds and the trust clearly says you have power to transact banking business as trustee, they need to honor your instructions.

A good many bank branch managers are afraid of doing anything "wrong." If legal said no, the manager won't budge against the legal department, but the manager may not be clearly communicating to the legal department because the manager may not have a whit's understanding of the trust and totally depending on legal to tell the manager what to do. Meanwhile, legal may not have a clear understanding of the situation either if they are depending on the branch manager to get the facts.

 

[ultrarunner]

US Bank was the one that asked for another copy of the trust agreement in Tennessee. I don't know what they did with the copy they had when the account was opened.

There were two branches near me. One was easier to deal with than the other one. So it might not be a bad strategy to try another branch.

Totally idiotic , IMO, to reapply for federal tax IDs when the trust has been using same tax ID for 25 years to file tax returns. Isn't the bank sending out 1099s using the same tax ID? And the tax ID has nothing to do with the authority of the trustee to transact business for the trust.

Your authority as trustee would be established by having a copy of the original trust plus any of the documents naming your as successor trustee. Additionally, I presume that the bank has a copy of your signature card over the trust account or they've lost it as well even though that is the banks own internal procedure to have a signature card on file?

Your authority to transact banking business would be specified by the terms of the trust. You might want to be prepared to highlight those terms for the nitwits.

Do not let them take your originals.

What was the reason given by the legal department?

Legal needs to verify Trust(s) are compliant with current IRS requirements.

No time frame for review and several times it was mentioned resources are spread thin due to take over of Union Bank.

The branch Banker is basically allotted 1 question per call to legal so 6 calls during my visit… Branch manager and 3 others at one time in huddle not knowing what to do saying how can these accounts exist with no documentation?

I just read several hundred 1 star reviews and not encouraging.

Years ago my brother applied for a mortgage and the bank ran my credit and sent me a list of documents needed… he and his wife were buying their first home… zero to do with me…

Sometimes it just makes one scratch your head and ponder these people (Collectively) hold the nations money?

I just keep paying the bills with my own money and stopped making Trust deposits pending resolution.

On a side note… as a business customer and personal customer the Banker could not speak with me until I went online to make an appointment… so I did

Everyday for 4 days I received a text to remind me and stating how much US Bank was looking forward to meeting with me.

The kicker is the night before the bank changed my appointment time after confirming 4 days in a row…

Everyone at the branch knows me from the moment I enter… which makes it strange I need a formal appointment to ask for help.

I provided masks and gloves during the pandemic to bank staff and always drop off a holiday basket each Christmas and manage a dozen accounts… through the rentals and family…

 

[Torvy]

Sorry about how this is being done. My folks have an irrevocable trust and wife is pressing for us to do the same. I'm looking for insights.

I'll share what I know from inside the banking world. Wife and I both worked for a huge US bank when we met. 20 years there between us and another 13 for me at another big bank.

Branches tend to give away titles, (everyone above teller is a 'VP') but don't have the higher positions or quality of staff. Despite VP titles, branch management is never more than 2 or 3 steps above teller in real pay grade and are not corporate VPs. Some focus group told them that customers want to deal with someone important, so there you go. To put it in perspective, actual VPs are usually about 6-7 levels above an hourly staff person.

Big banks, like many modern businesses, try to be more efficient by division of labor. As you have observed, 'Legal' tends to be a shared department at a central location. This is great until you get into your situation and the clueless branch managers don't know enough to explain to Legal. My last department handled small business loans and we actually had a lawyer on staff and co-located with us (3 days a week). It really helped him understand what was going on in underwriting and documentation.

I never worked for US Bank, but I am familiar with them. There should (may?) be a Trust department that handles these things. Paperwork beyond signature cards goes to a central location. All of this gets complicated when you have mergers and acquisitions involved. I've been involved in enough of those to know that outgoing staff are often irked and fail to share pertinent information as a 'parting gift'.

Short answer here is it is going to suck. I would avoid the branch and try to get in touch with Wealth Management (what US Bank calls their Trust department). The right kind of Trust and competent employees should have made this easy.

 

[D&D]

Sorry about how this is being done. My folks have an irrevocable trust and wife is pressing for us to do the same. I'm looking for insights.
The right kind of Trust and competent employees should have made this easy.

What is the right kind of trust?

 

[2manyrocks]

What IRS compliance could they possibly be concerned with?

Your trust records at home should have your IRS letter informing the trust of its FEIN, an original of the trust agreement, and an original of your trustee appointment. Once they have copies of this, not the originals that they'd lose again, there really isn't anything else they actually need unless the trust is about to terminate and be distributed and they have some concern that the funds won't be paid to the proper beneficiaries, which arguably isn't any of their business to police the trustee's administration of the trust.

Bank trust department may or may not be helpful because they don't want to get involved in handling bank customer deposit service situations unless they are actually going to serve as trustee and receive fee income. Otherwise, the bank trust department would be fielding customer service issues all the time.

If their resources are stretched thin, they shouldn't be hacking customers off to the point that they get themselves sued and/or lose all of your family deposit business.

There have been so many bank mergers that who knows what they've done with their own records anymore.

 

[ultrarunner]

Free Income for the bank is one aspect… interesting how their Best Money Market Checking limited to 3 checks per cycle morphed into a essentially interest checking as I don’t know how else to describe 27 cents on 54k total deposits?

Their best Savings is 4.75 right now.

I truly appreciate the insight from the TBN brain trust.

A coworker related a similar story where he gave up trying to retrieve a few thousand dollars but eventually got the money relatively easily when the account went dormant to the State and he claimed it…

My inexperience is definitely showing because a few keystroke through online banking would have transferred out all but $1 each.

Two weeks before mom passed a check was written on the account for trash removal and the landscaper sat on the check for 60 days before cashing it… check cleared and last that was the last activity.

What would happen if I backdated a check and deposited into my primary account which Mom is on?

 

[2manyrocks]

Free Income for the bank is on aspect… interesting how their Best Money Market Checking limited to 3 checks per cycle morphed into a no interest checking as I don’t know how else to describe 27 cents on 54k total deposit?

Their best Savings is 4.75 right now!

I truly appreciate the insight from the TBN brain trust.

A coworker related a similar story where he gave up trying to retrieve a few thousand dollars but eventually got the money relatively easily when the account went dormant to the State and he claimed it…

My inexperience is definitely showing because a few keystroke through online banking would have transferred out all but $1 each.

Two weeks before mom passed a check was written on the account for trash removal and the landscaper sat on it for 60 days before cashing it… check cleared and last activity.

What would happen if I backdated a check and deposited into my primary account which Mom is on?

Sounds like the bank flagged the trust account when they received notice from SS that your Mom passed. Who knows what that flag turned off in terms of processing check payments? I suspect their system was setup to show her as trustee, and then the social security death notice triggered something in their system that made it turn off account access because the system wasn't set to show you as successor trustee to continue administration of the trust. Branch manager just needs to update system records and stop sticking head in the sand.

Is the trust supposed to terminate and distribute the balance to the beneficiaries following your Mom's passing (after payment of any trust taxes or expenses)?

I wouldn't do anything that could look like self-dealing (depositing funds in your personal account) trying to work around US Bank's abysmal (IMPO) customer service.

 

[ultrarunner]

of course you are right…

The Trust’s main purpose was to minimize Estate Tax which is a mute point in 2023 because due to the current tax exemption being many many times greater than the value of the trust.

The 3 of us siblings are the beneficiaries and we 3 have a joint account at the bank since 1982.

When the Banker suggested closing with the check made payable to all three of us I readily accepted but Legal quashed it.

All I know is the Bank is about 8 staff hours into this right now with other customers having appointments becoming irate waiting around.

For my part I’m questioning the logic of continuing my business accounts once this is settled…

The hundred of online reviews are eye opening to say the least but only a few were trust specific…

My brother said make an appointment for all 3 of us and jointly we will say close the account as both parents are deceased with the funds made payable to all three of us as the listed benificaries.

 

[2manyrocks]

It was a great relief to me to be rid of US Bank and to be free of the hassle of administering a trust set up for tax saving purposes that in the end didn't actually save any taxes because of the increases in the federal estate tax exemption. Been there. Done that.

I feel your pain.

 

[ultrarunner]

I was with my parents when the Trusts were created and they really wanted to do their best.

Remember asking the lawyer what happens when the law changes and his answer is we go with the best course of action in the present.

I just added up 22k in professional fees paid to create and maintain the 2 Trusts all these years not counting my legwork the last 25 administering it for mom.

As a side note it is my understanding the partial interest the Trust holds in the rental property is not eligible for a step up in basis making the last 25 years of appreciation taxable plus subject to depreciation recapture.

The only positive that comes to mind is Dad took comfort at the time knowing they had done their best to put their affairs in order.

 

[2manyrocks]

25 years ago, the exemption was much more modest and assets were appreciating at significant rates. Once you exceeded the exemption amount, the estate tax rates were significant, if not nearly confiscatory, and there was nothing on the horizon to suggest that the exemption amounts were going to be raised. All of the signs at the time pointed towards facing a good sized estate tax bill in the future unless these trusts were used.

Then the estate tax exemptions were raised, but this wasn't the situation 25 years ago when this planning was done.

On the other hand, I know a guy whose mom refused to do any planning. After she died, he told me he had to come out of retirement and take a job just to pay his share of the estate tax bill because her primary estate asset was a piece of highly appreciated real estate and her estate didn't have the cash to pay the estate tax bill.

Considering the amount of appreciation in real estate prices over the last 25 years, especially the last four years, the estate tax projections that were done 25 years ago probably look ridiculously low in retrospect. The thing that changed was the increase in the estate tax exemption amount, and that was hoped for, but unexpected.

 

[Sigarms]

Berfore our trip to California for our family vacation, we had to make an amendment in our trust. All 3 of us were on the plane both ways, and the dumb question becomes what happens if by chance the plane goes down and all three of us perish (our son is the benificiary, but not the exectuor if something happens to my
wife and I).

In the process of changing all of our assetts into the trust including our assetts with the bank, I've learned that either the bank doesn't know what they're doing or our laywer doesn't know what he's doing, and after talking with both, my money is on the bank not knowing what they're doing.

They also "lost" our trust paperwork that was supposed to be sent via intercompany courrier so it won't get lost. Go figure.

On a sidenote, I can't help but wonder if we are the only family that has the executor of their trust not related to them in anyway? Reality is my Dad and Father in law use to be listed, they since died, and my mother in law is to old to carry that burden in our opinion. When we went over a list of prospects on who we wanted as the executor on family members, it came down to a good friend whom we trust over family.

When the son get olders (he's only 18 now) he will most likely be the executor then, but not now.

 

[2manyrocks]

Betting on friend over family might or might not be okay but I would very much consider making the son co-executor so he has equal control.

 

[ultrarunner]

I’ve been named executor for several non related individuals… one were divorced with minor children and I was the only one both could agree on.

Fortunately for me it never came to be as individuals remarried or the kids became old enough.

It’s on honor to be considered but I’m glad it never put into action.

 

[ultrarunner]

Seems lost documents are not uncommon in banking?

Just imagine if Banking were subject to a HIPAA like hospital standard?

The trust documents contain social security numbers plus other personal identifiers.

Now that everything is going Digital it’s only a matter of time until the next data breach.

I remember a time when banking was simple and a 14 year old earning a W2 paycheck could walk into a bank and open a checking account with no parent or guardian and the bank manager had real authority…

B of A branch manager Walter Kendall said anyone old enough to be holding down a regular job is old enough to have a checking account in his bank… he was also the first person to ever call me mister when he would greet me on payday coming it to deposit my paycheck.

My brother had a no co-signer credit card at 16 with a $200 limit secured by his bank account as at 16 he was a lifeguard for the park district…

I’m really showing my age…

 

[Michiganguy]

We just set up a trust.
Out of 4 financial institutions that have accounts that needed to be transferred into the trust only one handled the transfers into the trust correctly the first time. Another did all the paperwork setting up the trust account but failed to transfer any of the accounts into the trust, another listed the wrong name as successor trustee and the last never completed the trust paperwork after 2 weeks so the accounts weren’t transferred.

 

[2manyrocks]

Banking changed for the worst when Congress repealed the Depression era legislation that forbade interstate banking that used to reign in the size of banks not to mention the obvious monopolization issues that were ignored at the time.

A friend of mine who was a very experienced loan officer/underwriter once that there wasn't a banker in Nashville that hadn't been right sized, down sized or merged because of all the bank mergers that followed. Respected bank officers moved on to different locally owned banks because they had a following of customers that wouldn't put up with the new bank policies and every decision having to be run through a bureau of desk sitters that didn't know the customers and didn't care, either.

Back to Sigarms, I think you need to think about naming your son as Co-executor if you are firmly decided on having a friend as exec. Also, you need to think about whether you want your documentation to also state that if your son has attained a specific age like 25, he can serve alone without the friend. You might think you have the time to change this later, but if you suffer a stroke or accident that leaves you incapacitated to make this change, then you're stuck.