Dear Liz: Someone recently asked whether to make a bank account “payable on death” or put it in their living trust. Our bank has refused to allow us to retitle our accounts so we can have them in our trust. Is “payable on death” our only option?
Answer: No, but you may need to move your accounts to another firm.
Some large national banks do balk at retitling bank accounts, notes Jennifer Sawday, an estate planning attorney in Long Beach. By contrast, many smaller banks, credit unions and big brokerage firms have no problem retitling accounts to living trusts.
If your bank isn’t willing to help you now, just imagine how difficult it will make matters for your loved ones after you die and they need to access your accounts, Sawday says.
If you’re reluctant to leave your big bank entirely, consider keeping a small amount of money in a day-to-day checking account while putting the bulk of your cash in a more trust-friendly bank.
I have to say–your advice is always spot on, and it’s free! I have been a loyal reader of your advice column for many years, and I just wanted to express some gratitude for what you do (for it is very rare and precious thing in this day and a change).
Thanks for the kind words!
Why put a bank account into a trust instead of using POD? Both avoid probate, both provide a means of making sure the money goes where you want it to go. My mother had a trust that comprised her real and personal property, but all her bank/credit union accounts were POD. When she died, the banks/credit unions issued separate checks to those listed on her accounts, so everyone got exactly the amount of money she intended for them to have. The trust took care of everything else.
That can work out fine, as long as the successor trustee has access to enough cash to pay the final bills.