Successor trustee access to checking account titled to revocable living trust

[Kris989]

Jurisdiction

California

Unfortunately after typing this up I realized my question became very long winded. So let me first state the basic question, and then details afterwards: When successor trustees of a revocable living trust become the trustees, can they (after providing required documentation to the bank) write checks out of a checking account that is titled to the trust?

Details:

My wife and I have a revocable living trust with the two of us as co-trustees. The trust states that our two children are to become trustees "If the office of trustee becomes vacant by reason of death, incapacity, or any other reason…".

Our checking account is now titled to the trust. My question is if our children were to become trustees, how will they leverage the assets in the checking account so they can manage our estate, especially if we are incapacitated, but not dead. I always envisioned that they would just need to show the bank the necessary evidence that they are now trustees, and would then be able to start writing checks and get online access to do other account transactions. However, after talking with the person who helped us title the account to the trust, it sounded like it would not be this straight forward.

In order to title the account to the trust, we had to fill out a "TRUSTEE'S ACCOUNT AGREEMENT AND CERTIFICATION OF TRUST" form, which I guess was in lieu of the bank just using a copy of the "Certification of Trust" that our lawyer produced (and which the bank did not ask for). This document stated:

"A successor Trustee(s) may only act upon the resignation, incapacity or death of the Trustee/Co-Trustee. Before any successor Trustee/Co-Trustees may transact any business on this Account, the successor Trustee(s) shall (a) provide the Credit Union with (i) a letter of resignation signed by the resigning Trustee/Co-Trustees, (ii) a declaration under penalty of perjury from the treating physician of the Trustee/Co-Trustee concerning his/her incapacity, or (iii) a certified copy of the death certificate(s) for the Trustee/Co-Trustees; and (b) execute a new Trustee's Account Agreement form. The Credit Union may also require a new certification of Trust per Probate Code §18100.5."

This part all seems reasonable and as expected. I asked what successor trustee privileges where implied by "A successor Trustee(s) may only act…", and did that mean they can write checks using our existing checkbook. The answer was no. So I asked how do they get access to the funds. The poorly worded answer I got sounded something along the lines of transferring all the funds to a new account that would be in the name of our children. That didn't really make sense to me, especially in the case of us being incapacitated. In that case we just want them to be able to pay our bills using our funds in our accounts, not actually take ownership of the account funds.

When I questioned this "new account" answer, she then inquired with her boss and came back with "the trust would need to be updated to indicate the new trustees". I asked "the trust our lawyer drew up?", and she said yes. I of course said that can't be. I think she was misinterpreting what her boss said, and probably meant that a new "TRUSTEE'S ACCOUNT AGREEMENT AND CERTIFICATION OF TRUST" would need to be filled out, which I think makes sense since the account would have new trustees. However, that still doesn't answer how our children would then use the account.

My goal here is really just to get some clear instructions that I can pass along to our children in case they are ever put in the situation of having to be our trustees, especially if it is because we are incapacitated. I'm less concerned about what happens if we both die. They'll definitely be consulting with a lawyer in that case, and since they are the beneficiaries of the trust, they can just take ownership of the funds and use as they see fit. I eventually want to get someone more knowledgeable at the bank on phone, but first want to be better educated on how this should all work.

BTW, we also each have a Durable Power of Attorney for Management of Property and Personal Affairs, which lists our children as agents in fact. If my wife and I were to become incapacitated, perhaps our children would be better off using their role as attorney in fact to access the checking account rather than as Trustees.

Thanks!

 

[adjusterjack]

I only read the question but not the details. The successor trustees can do what the trust documents allow them to do.

I imagine that there are parts of the CA Trust Code that provide them with remedies when banks or others refuse to acknowledge the terms of the trust and the duties of the trustees.

You and your successor trustees should sit down with a trust attorney and review all those contingencies so that your successor trustees know what is expected of them and how to deal with others.

 

[Kris989]

I only read the question but not the details. The successor trustees can do what the trust documents allow them to do.

I imagine that there are parts of the CA Trust Code that provide them with remedies when banks or others refuse to acknowledge the terms of the trust and the duties of the trustees.

This is from the Certification of Trust. I don't see this spelled out quite so clearly in the trust itself, but that could be because as mentioned below it is already covered by California Probate Code:



This hasn't really answered the question as to whether or not the successor trustees should be able to write checks using the existing checking account and existing checkbook. It just makes it clear (I think) that at the very least they could xfer the funds in the checking account to one that they open and maintain (and therefore can write checks out of). I was hoping for something a bit less disruptive. The existing account really should be kept open and kept funded to deal with all the auto payments that come out if it monthly, so that would probably mean the successor trustees would need to open a 2nd account that they could write checks out of while still maintaining the existing account.

You and your successor trustees should sit down with a trust attorney and review all those contingencies so that your successor trustees know what is expected of them and how to deal with others.

Yeah, I'm always accumulating a list of questions. I contact him when I have enough questions to make it worth while, and I and feel I have educated myself well enough to discuss them intelligently. Still working on the latter part for this question.

 

[zddoodah]

When successor trustees of a revocable living trust become the trustees, can they (after providing required documentation to the bank) write checks out of a checking account that is titled to the trust?

There is no universal answer to this question, but the ability and authority to write checks from a trust bank account would probably be the single most common power conferred on the trustee of a trust (whether the initial trustee or a successor trustee).

I didn't read the details, but if you don't understand some aspect of the trust you created, the best thing to do is reach out to the attorney who handled this and pose your question.

 

[Kris989]

I didn't read the details, but if you don't understand some aspect of the trust you created, the best thing to do is reach out to the attorney who handled this and pose your question.

Understanding aspects of the trust on my end isn't the issue (as least in regard to this issue). It's getting a straight answer from the bank as to whether or not they will let a successor trustee write a check after having proved that they are now a trustee (by providing the Certification of Trust and evidence that they are now a trustee, such as a Death Certificate or doctor's note of incapacitation). I think I'll just need to call the bank again and hope I get someone more knowledgeable than the person in the branch who took care of titling the account to the trust.

 

[zddoodah]

It's not that you need someone more knowledgeable. I doubt any bank employee is going to answer this as a hypothetical. I wouldn't, and if I were in-house counsel for a bank, I'd tell say that the stock answer should be, "we'll evaluate the request at the time it's made and based on the documents that are submitted." It's not being difficult; rather, answering any other way creates expectations, and you don't want someone coming back and saying, "well...when I asked [name of person who might not still be employed there] five years ago, he/she told me ____, and now you're saying you can't do this?!"