Putting Bank Accounts Into a Trust: Checking, Savings, CDs and Safe Deposit Boxes

Bank accounts look like the simplest asset, but they are also the easiest to open on the spur of the moment and forget to put in the trust. This article explains the difference between the options.

What Are the Two Ways to Put a Bank Account in a Trust?

Option 1: Retitle the account to the trust
The owner becomes “Wei Zhang, as Trustee of the Wei Zhang Revocable Trust.”
- Advantage: If you die or become incapacitated, the successor trustee can manage the account directly;
- How: Bring the trust or a trust certification and your ID to the bank. Many banks open a new trust account and move the funds.

Option 2: Keep it in your name and name the trust as the death beneficiary
Register the account as “payable on death” (POD) or “in trust for” (ITF) your trust.
- Advantage: Simple paperwork; daily use does not change;
- Limitation: It only works at death. If you become incapacitated, the successor trustee cannot reach the account and a power of attorney is needed.

Which Option for Checking, Savings and CDs?

• Everyday checking: Many people keep it in their own name and name the trust as death beneficiary, for convenience. A power of attorney should also be in place;
• Savings and money market accounts: Can be retitled to the trust;
• Certificates of deposit (CDs): Can be retitled or given a beneficiary. Some banks may require waiting until maturity to retitle, to avoid an early withdrawal penalty. Ask first.

Can’t I Just Name My Children as POD Beneficiaries?

You can, but be aware:

• If a child is a minor, the bank cannot pay the child directly, and a court-appointed property guardian may be needed;
• If a child dies before you, the money may not go where you intended;
• If different accounts name different children, changing balances can make the split unequal;
• If a child has special needs, receiving money directly may affect government benefits.

Naming your trust as beneficiary means everything is distributed under one set of rules.

Isn’t a Joint Account With My Child Easier?

This is common but risky. In New York, when a joint account has a right of survivorship, the money goes directly to the surviving joint owner at your death, not according to your will or trust. In addition:

• Your child’s creditors or divorcing spouse may reach the account;
• Your other children may see it as unfair, leading to family conflict;
• It may create additional issues when applying for Medicaid.

If you only want your child to help pay your bills, consider a New York convenience account (Banking Law §678). Your child can make deposits and withdrawals for you, but the money does not go to that child at your death.

Does FDIC Insurance Change Once the Account Is in a Trust?

Since April 1, 2024, FDIC coverage for trust accounts (both revocable and irrevocable) is $250,000 per owner per beneficiary, counting up to five beneficiaries, for a maximum of $1,250,000 per owner at one bank. People with larger deposits can use this to rethink their coverage. We recommend confirming your coverage with the FDIC’s official estimator.

Does Retitling Change My Taxes?

During your lifetime, a revocable trust generally uses your Social Security number. Interest is reported on your personal tax return as before, and no separate tax ID is needed.

What About a Safe Deposit Box?

Safe deposit boxes often hold deeds, jewelry and even original wills. If your family lacks access after your death, a court order may be needed to open it. We recommend:
- Renting the box in the name of the trustee, or
- Adding a trusted co-lessee, and
- Never keeping your only original will in a box no one else can open.

What About Overseas Bank Accounts?

Foreign accounts are usually governed by local law and bank rules. Putting them into a U.S. trust may not be possible, and U.S. reporting requirements apply. (See Part 15.)

The Bottom Line

The rule for bank accounts is simple: either retitle to the trust or name the trust as beneficiary; one of the two must be done. Which one depends on whether you also need protection in case of incapacity.

Attorney’s perspective

Bank accounts look simple, but joint accounts and outdated POD beneficiaries cause frequent problems. I go through each account with the client (which to retitle, which should name the trust as beneficiary, which suit a convenience account) and prepare a power of attorney so someone can act if you become incapacitated.

For advice about your own family’s situation, call +1 718-218-5805 or schedule a consultation. We meet clients in Flushing and Manhattan, in English or Chinese.

Related: Part 11: Putting Stocks, Funds and Brokerage Accounts Into a Trust | Part 18: How to Maintain a Trust: During Life, During Incapacity and After Death

Series overview

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. For advice about your situation, please contact us.

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