We hold title to our home in the name of our trust. We should be selling the house in a few months. When we receive the proceeds from the sale, and they are deposited into our bank account, how does it work when our bank account is not in the name of our trust? Our bank account is just a normal one with just our names on it.
I think we had to create a bank account in the name of the trust when we sold our house. YMMV.
dolphinboy is correct, you will need the tax ID number of the Trust to open the account. I suggest doing this ASAP, in my experience opening a Trust account at a bank is a bit of a hassle as they want the Trust document to review.
One exception for me was opening a Trust account at Fidelity, they didn’t care about the Trust document at all.
Agree with both responses thus far. If you don’t have a Tax ID for the Trust yet, get one, and then open a bank account in the name of the Trust. Don’t worry, as Trustees of the Trust, you will retain access to all the funds in the account.
If you still have assets in the name of the Trust when you and your spouse pass, your heirs will thank you for taking these actions. Assuming, of course, that you want them to inherit those assets.
As Trustee of the trust, you might be able to provide written instructions to the closing agent as to where to send the proceeds. If that is permissible, the closing agent (usually a title company or an attorney) might accept wire instructions into a bank account that you personally hold, instead of one in the name of the trust.
If this is feasible, be sure to provide the instructions as “trustee of the *** trust”
(In fact, to be thorough - and the title agent may require this - you probably want to sign off on your seller stuff “individually, and as trustee of the *** trust”)
All this is good info. I also have an email in with a realtor I know asking this same question. I’ll see what she says, and post it here.
This is a great point. When my parents purchased their last house, it was purchased in the name of their trust. When they sold it 20 years later, they had not bothered to set up an account in the name of the trust. I don’t remember the exact disposition, but there was some hesitation from the title company as to where the money needed to be sent.
When my Dad passed, our attorney strongly advised us (Mom and me) to set up said account. Wise advice from counsel.
I’ve heard back from my realtor, and she confirms what everyone is saying here - to create a new account held in the name of our trust to receive funds from the sale.
Well, time to dig out our signed trust so that I can copy it and go to our bank and create a new account. They’ll like that - they’re the bank that pressures their employees to create new accounts all the time.
Did she indicate that you should get a Tax ID for the Trust? IANAL, so I don’t know if it’s necessary, but it wouldn’t be a bad thing to do.
She didn’t, but that’s my understanding. I work at a law firm, so I emailed our estate planning secretary to see how complex that is. I think I can do it online, but I’ll follow her advice.
You certainly can!
As executors of the trust, could you not move the house back to individual possession and then have the funds go to your individual account instead of setting up a trust account at the bank?
Good point. If teelabrown is the grantor of the Trust, any income will be under her SSN. And if it’s a revocable Trust, the she can move assets in and out as she pleases. My experience is with a Trust that became irrevocable after the death of the grantors, and then a tax ID for the Trust was needed. Still, she can open a trust bank account to keep the funds in, if the objective is to keep the assets in the Trust.
Or in simpler terms: do what the lawyer says.
Does having it in a trust affect the tax benefit of living in a house you own for 3 of the last 5 years?
Ask your lawyer. There are different kinds of trusts. I just sold a property whose title was a trust and the proceeds went to me using my SSN just like anything else.
I’ve now had a chance to talk to our estate planning paralegal and, more importantly, to two title officers in our town.
To sum up: we don’t need a unique tax ID number on a trust account. For simple trusts like ours where both trustees are now living, it is recommended that we use one of our social security numbers. They recommend using the SSN of the person whose name first appears on the title of our home. That’ll be Mr. brown.
So he will take copies of our Trust and our Certification of Trust down to our bank and get that trust account opened and ready to receive proceeds when the time comes. Whew.
Following up, just for an interesting note.
We took the copies of our trust documents and went to our bank to open the trust account. They said their bank officers were all booked up and made an appointment for next month for us to come back and do this.
What a huge change for a bank that got into trouble a few years ago for surreptitiously opening accounts in their depositors’ names. They certainly opened them back then with no delay or fuss. Good thing we don’t need this done really soon or we’d be stressed out. Jerks.
I hope I am wrong, but I suspect that the fun is just beginning.
After this sale is over and our mortgage paid off with this bank, we’re going to a highly-rated credit union for our banking needs in retirement.