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Question:

I am successor trustee for my Mom’s living revocable trust. (She is still living.) All of her assets are currently held in a trust brokerage account, with the exception of a personal checking account that is held at a local bank outside the trust. The checking account has four designated beneficiaries, who are the same beneficiaries that are designated in the trust. Would it simplify the estate settlement process to change the checking account beneficiary to the trust itself, rather than the four individual people? This way, the four beneficiaries would ultimately get just one check each when the trust is closed, rather than having to collect part of their inheritance from the bank. Also, if the trust is the beneficiary of the checking account, this would seem to create a ready-made estate account from which to pay final expenses and distribute trust assets.

Follow-up question: If the trust is the beneficiary of the checking account, is it possible to keep that account intact as an estate account after my Mom passes (and presumably after I obtain an EIN for the trust), or would the bank close the account and write the trust a check in the amount of the balance? If the former is the case, great. But even the latter scenario would seem to be an improvement over the current situation, because I could immediately turn around and use the proceeds from the closed personal checking account to open an estate account in the name of the trust.

Response:

Yes, it would be easier if the beneficiary of your mother’s checking account were changed to the trust. As you suggest, this would mean only the trustee, rather than all four beneficiaries, would have to deal with bank after your mother’s death. However, it would be even better if your mother transferred the account to her trust now. If the trust is the beneficiary, the account would have to be closed upon your mother’s death. That would not be the case if the account was already in the name of the trust. Then, as you suggest, you would have an account in place to pay estate expenses rather than having to create a new one.  You are right, that the trust would have to obtain a new EIN since upon your mother’s death because it then would become irrevocable and could no longer use your mother’s Social Security number, but the income should be negligible and no actual taxes should result.

Finally, I’d recommend that your mother add you as co-trustee now if she is willing to do so. This has advantages while she’s alive in case she needs assistance managing her finances. It would also make things much easier upon your mother’s death or should she become incapacitated. While you can step in as successor trustee, you would have to establish your identity with the bank and the financial institution holding her brokerage account at that time. This could cause a delay and it would occur when you might have lots to deal with upon your mother’s death or disability.

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