Interaction between Investment Accts & Local Trust Co.

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lawman3966
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Location: Tacoma WA

Interaction between Investment Accts & Local Trust Co.

Post by lawman3966 »

I'm new to trusts and wills, so please bear with me.

I'm posting to learn more about the interaction between my local trust company and investment accounts listing the trust as a beneficiary. I intend to leave money in trust for two nieces who are still teenagers. My current thought is to have the assets placed in investment accounts at Schwab (CS) and to list the trust account at my local trust co. as the beneficiary.

I have called both the trust services and trust hotline at CS and asked whether I need to set up a "trust account" at CS and then arrange to have control over the assets transferred to my local trust company once I pass on. I know that I know nothing about this topic. But I was disappointed to discover that the person at the CS trust hotline was no better informed than I was, and simply gave me another phone number to call (the trust services number). I called trust services, failed to reach a live person, and left a call-back number. I have yet to receive a phone call from them. Hence this message.

Any information shedding light on this admittedly basic element of trust accounts would be appreciated.
Last edited by lawman3966 on Wed Jun 22, 2022 5:43 pm, edited 1 time in total.
bsteiner
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Re: Interaction between Investment Accts & Local Trust Co.

Post by bsteiner »

You have to create the trusts, either in your Will (most common), or in a separate trust instrument.

Then you have to leave the assets to these trusts, either in your WIll (most common), or in some other way.

You may want to give the trust company a draft of your Will to make sure that it's acceptable to them. You may also want to ask them what their minimum size requirements are, to make sure they'll accept trusts of that size. I'm aware of trust companies that will take trusts as small as $250,000 and others that generally require $10 million.
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Lee_WSP
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Re: Interaction between Investment Accts & Local Trust Co.

Post by Lee_WSP »

This requires the help of a trusts & estates attorney.

But digging a bit into your question, you mention both an existing trust co and Schwab. My first takeaway from your post was that perhaps your nieces have an existing trust and you want to add to it (the terms of their trust document may or may not allow this (it probably doesn't)). Is that correct or are you looking to leave your estate to your nieces in trust instead of outright?
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lawman3966
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Re: Interaction between Investment Accts & Local Trust Co.

Post by lawman3966 »

Lee_WSP wrote: Wed Jun 22, 2022 6:27 pm This requires the help of a trusts & estates attorney.

But digging a bit into your question, you mention both an existing trust co and Schwab. My first takeaway from your post was that perhaps your nieces have an existing trust and you want to add to it (the terms of their trust document may or may not allow this (it probably doesn't)). Is that correct or are you looking to leave your estate to your nieces in trust instead of outright?
I don't have any trust account set up yet. I am still exploring the option of setting up a trust account at a local trust company and am still trying to understand how an investment account the assets of which I want held in trust after my death will be handled upon my death. i.e. does the money actually get transferred into another account, or does the account stay in place and merely have control transferred to a designated trustee?

For instance, if the investment account at CS names a trust account as a beneficiary, or merely names a trustee, is the investment account itself merely an ordinary account that has a trust named as a beneficiary, or is a different account type at CS needed for this purpose? I hope this question is clear. If not, please let me know.

Regarding leaving my estate to my nieces, I am looking to leave a portion of my estate to my nieces, one portion of which upon my death, and another portion to be distributed later via a trust (so that they don't blow the money in their teens/twenties). I am not leaving my entire estate to my nieces.
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Lee_WSP
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Re: Interaction between Investment Accts & Local Trust Co.

Post by Lee_WSP »

Got it.

Under either a revocable living trust or a testamentary trust estate plan, you would name the actual trust that is created upon your death as the beneficiary of the retirement accounts.

As Bruce said, the assets are transferred from you (the grantor) to Schwab (the trustee) to be held in trust for the benefit of your nieces (the beneficiary). This transfer either takes place while you are alive (a living trust) or when you have passed (a testamentary trust).

If testamentary, the assets first pass to the personal representative who then pays your last bills and then transfers the assets to Schwab.

If living, you place the assets in trust with yourself as trustee and you as beneficiary. When you die, your successor trustee just replaces you as trustee and then divides up the trust into the nieces trust, the B trust, the G trust, and distributes any specific bequests. They also pay your bills.

I recommend leaving your assets in trust instead of outright. Your nieces may be trustees of their own trust, the trust need not terminate. They can have effective control over it, but have the assets protected from creditors, the estate tax, and divorce.
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