The primary goal of an estate plan is typically to create a roadmap for the distribution of estate assets upon the death of the individual creating the plan. A comprehensive estate plan, however, will also include a variety of additional interrelated goals and objectives. In order to create a well thought out and all-inclusive estate plan, it is best to work closely with both your Missouri estate planning attorney and financial planner. Before you can begin on your estate plan, however, it is crucial to have a clear understanding of type of assets you own and the value of those assets. For example, do you own a revocable trust account? If so, do you have a complete understanding of what a revocable trust account is and how one might fit into your estate plan?
Most people have several different deposit accounts with one or more financial institutions. A deposit account is a savings account, current account, or any other type of bank account that allows money to be deposited and withdrawn by the account holder. We all use these accounts on a daily basis to cash checks, pay bills, and/or save money. Despite using these accounts on a regular basis, most of us know very little about the laws that govern deposit accounts nor about the characteristics that distinguish one type of deposit account from another. When you sit down to create your estate plan, however, it may become important to have at least a basic understanding of the applicable laws. Furthermore, it would be in your best interest to learn more about the different types of deposit accounts in order to determine which type is best for you and your estate planning needs.
Your checking account or savings account you have at your local bank are both examples of a basic deposit account. You are the owner of the account, unless you opened a joint account with a spouse, parent, or other individual, in which case the account is jointly owned. Have you ever considered what happens to the funds held in the account in the event of your death? If you own a joint account, the co-owner may automatically inherit your interest in the account, depending on the type of deposit account you own. If you are the sole owner of the account, however, what happens to the funds in the account if you die? A trust account answers that question by including designated beneficiaries when the account is established. A trust account is defined by U.S federal law in 12 C.F.R. § 330.10 as “A deposit account that indicates an intention that the funds will belong to one or more named beneficiaries upon the last owner’s death.”
Revocable Trust Accounts
Trust accounts can be revocable or irrevocable. As the name implies, a revocable trust account is one in which the owner of the account may modify or revoke the account at any time and for any (or no) reason. Revocable trust accounts can be formally created or occur informally. Examples of a formal revocable trust account include a revocable living trust or family trust. These types of revocable trust accounts are generally recognized as such by the owner, or Settlor, when created because they typically require an estate planning attorney’s assistance to establish. You may, however, be the owner of an informal revocable trust account as well and not even realize it. “Payable on Death (POD)” deposit accounts, for instance, are actually revocable trust accounts. Your account at the bank may be a POD account in fact. A POD account allows you to designate a beneficiary who will automatically become the owner of the account, and the funds therein, upon your death without the need for the account to be part of the probate of your estate. Other similar account designations that also qualify as revocable trust accounts include:
- Payable on Death (POD) accounts
- In-Trust-For (ITF) accounts
- As-Trustee-For (ATF) accounts
The distinguishing characteristic of each of these types of accounts is that at least one beneficiary has been named to inherit the owner’s interest in the account upon the death of the account owner.
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding a revocable trust account, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.
- Beneficiary Designations and the SECURE Act: Prior Designations - May 5, 2021
- Beneficiary Designations and the SECURE Act: Eligible Designated Beneficiaries - May 1, 2021
- Updating Your Plan: Powers of Attorney - January 17, 2021