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Modern Estate Planning Blog

Elder Law & Special Needs Planning

Can a Trust Own an Investment Account? | Ask Heather Chubb

April 21, 2011

Q. I just created a revocable trust and was trying to change the ownership on my investment account and the company said they don’t let trusts own the accounts. What now?

A: I’m sorry to hear that you are having trouble changing the ownership of your account. We have also encountered this on occasion and we are seeing a trend happening more frequently especially with online accounts. This issue is of particular concern because it is important that all your assets be owned in the right way to ensure that the estate plan you worked so hard to create will work the way you envision when you need it. If assets remain in your individual name they will be subject to probate if you die or become incapacitated.

There are several options to try, however, each has limitations.

  • Your first option is to simply move the account to a friendlier institution that is willing to work with you.
  • If you don’t want to move the account the next option is to name the trust as a beneficiary with a Pay On Death (POD) or Transfer On Death (TOD) designation. That way when the account holder dies the funds can flow into the trust without probate. But be aware that some companies will not allow as trust as a POD/TOD.

In addition, the POD/TOD won’t help if the account holder becomes incapacitated instead of dying. This is where your Durable Power of Attorney (DPA) can come in handy – if the institution will accept it. If they will accept it then your agent will have access to the account funds on your behalf. If they won’t accept the DPA you may be stuck with using the probate court to open a conservatorship to manage the account. The time to ask about your DPA is at the same time you ask about the POD/TOD.

  • If the company will not accept your customized DPA, ask if the company has its own Durable Power of Attorney form. If they do fill it out and get it on file now. You may also want to have your estate planning attorney review the company’s form to make sure it is durable. However, this will only help if you are incapacitated, if you die and there is no POD then the account is going to probate.
  • If the company will not allow the trust as a POD/TOD then you will need to think carefully about whether you want to continue doing business with them. Without the POD/TOD the account remains in your individual name and is subject to probate and your estate plan will fail with respect to this asset.

Don’t forget to keep a copy of any correspondence between you and the company and follow up to make sure your documents made it to their destination. I would also encourage you to send your correspondence in a trackable manner (e.g., certified, return receipt requested) in case there is any issue in the future with the company claiming they never received your documents.

Call The Chubb Law Firm today at (916) 241-9661 to review your goals and discuss your options.

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CLIENT Story

I totally see the difference between your service and your typical legal estate planning service. The experience you mentioned where you get this big document you don’t understand and a trust that never gets funded was EXACTLY our first experience. It cost a small fortune too. Really - it is the difference between providing a legal document and providing an estate planning service.
Susan

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