What Is an Account in Trust?

The term account in trust refers to a financial account opened by an individual and managed by a designated trustee for the benefit of a third party per agreed-upon terms. The trustee who manages the funds and assets in the account generally acts as a 澳洲幸运5官方开奖结果体彩网:fiduciary, which means they have a legal responsibility to manage the account and assets in the best interests of the 澳洲幸运5官方开奖结果体彩网:beneficiary.

How an Account in Trust Works

Accounts in trust are also called trust accounts. They are created for the benefit of an individual and managed by a trustee. Trusts often come with certain conditions for use. For example, a parent can open a bank account for their minor child and stipulate rules as to when the child can access the funds/assets in the account as well as any income they generate.

They can hold different assets like cash, stocks, bonds, 澳洲幸运5官方开奖结果体彩网:mutual funds, and real estate among others. Trustees can vary, as well. They can be the person opening the account, someone else designated as a trustee, or a 澳洲幸运5官方开奖结果体彩网:financial institution, such as a bank or brokerage firm.

Trus♛tees have the option to make certain changes to the account in trust. These can include naming a successor trustee or another benefi🐟ciary. A trustee may close the account or open a subsidiary account to which they can transfer some or all of the assets in the account in trust. The trustee is obligated to follow the instructions of the document that established the account in trust.

Types of Accounts in Trust

The specifics of accounts in trust can vary depending on the type of account, terms outlined in any trust agreements⛦, as well as applicab🐓le state and federal laws.

Uniform Gifts to Minors Act (UGMA)

A 澳洲幸运5官方开奖结果体彩网:Uniform Gifts to Minors Act (UGMA) account allows minors to legally own the assets held within it. However, they can't access the account's principal and income until they reach legal age. This type of account in trust is typically opened by parents to fund their children's higher education and to secure certain tax protections.

UGMA accounts are managed by a custodian, who is appointed by the donor. The 澳洲幸运5官方开奖结果体彩网:custodian must manage the account for the benefit of the minor. They can inves💮t the funds and withdraw money(within limits) for the minor's care and n༒eeds. Contributions can also be made to the account with no limits.

Payable on Death (POD)

Another type of account in trust is a payable on death (POD) trust also called a Totten Trust. These accounts are essentially 澳洲幸运5官方开奖结果体彩网:bank account💙s w🃏ith named beneficiaries who can legally assume the trust's assets and income when the grantor dies. In addition, this type of account does not need to clear probate for assets to transfer to the rightful beneficiary upon the death of the initial owner.

There are events, however, that prevent the named beneficiary from obtaining the full value of the account upon the death of the account owner. In 澳洲幸运5官方开奖结果体彩网:community property states, the spouse of the decedent may be entitled to half of the account. The spouse is not entitled to funds accumulated before marriage. Also, the beneficiary does not receive a ꦫbenefit from a jointly owned account if the joint owner is still living. The benefit is payable upon the death of the last surviving owner.

Housing Accounts in Trust

A housing account in trust is opened by a mortgage company. The lender uses this account to pay property taxes and insurance on a homeowner's behalf. This type of account in trust is also called an escrow account, an🅷d funds to be deposited into it are usually included in the monthly mortgage payment.

The two main types of escrow accounts are the purchase escrow account and refinance escrow account. A purchase escrow account holds funds related to the purchase of a home and is managed by an escrow agent. 澳洲幸运5官方开奖结果体彩网:Earnest money, presented by the buyer to the seller, and other real estate transaction fees, such as loan fees, agent commissions, and 澳洲幸运5官方开奖结果体彩网:appraisal fees, are held in a purchase escrow account.

A refinance escrow account, much like a purchase escrow account, holds fees related to the transaction, which, in this case, is the refinance of a home. Such fees include appraisal and attorney fees.

How to Set Up an Account in Trust

Before setting up an account in trust, review your availabl🌸e ﷽options and choose the one that best suits your needs. Consider the following details:

• Identify who you want to manage the trust and how you want it managed during your life and upon death
• Identify who you want as your beneficiary(s) and how you want them to receive the assets
• Determine what assets the trust will hold and under what condition they can be 澳洲幸运5官方开奖结果体彩网:disbursed

Once the details are confi💖rmed, complete and file the appropriate paperwork as per the rules of your state. It migh💃t be best to consult an attorney to ensure that the account is in line with your expectations.

Benefits of an Account in Trust

Some individuals like accounts in trust because they avoid probate, enabling a quicker and easier distribution of assets. These accounts also may provide favorable tax benefits. For instance, the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) considers income as trust income (for irrevocable trusts), which usually results in a lower tax liability.

These accounts also allow the donor's wishes to be carried out during their lifetime and/or upon death. They can specify how they want their assets managed, how and when they will be dispersed, and who will manage them.

Example of an Account in Trust

Mr. and Mrs. Q. Sample are school teachers who want to retire in 15 years. They have three adult children and two infant grandchildren. Hoping to secure their assets and create 澳洲幸运5官方开奖结果体彩网:college funds for their grandchildren, the🌳y explore accounts in trust as o𒁃ptions.

After meeting with an attorney, they decide to protect their assets in a 澳洲幸运5官方开奖结果体彩网:revocable trust, whereby they serve as co-trustees and their eldest child as a successor trustee. Their assets, including real estate, stocks, and other investments, will be managed in the trust. Upon death, all assets will be distributed equally among their children, who are named as the beneficiaries.

They also establish education trust accounts for each grandchild with an initial deposit of $5,♏000 into each account. Their goal is to invest $2,000 per account each year until the grandchildren reach the age of majority. The funds can only be used for educational purposes. However, if the grandchild does not attend college or trade school, the funds will be dispersed in monthly installments beginning at age 25.

The Bottom Line

澳洲幸运5官方开奖结果体彩网:Estate planning 🌟can help you make important decisions about how your assets are distributed in certain situations, including after you die. Setting up an account in trust is one of the options available. This is an account that is set up to be managed by a trustee of your choice. You can name which assets are held in the trust, how they're managed, and when they're distributed. As with any financial decision, it's always a good idea to consult a financial professional to see if an account in trust is right for you.