Definition
The term bank account trust refers to an estate planning tool which allows a trustee to provide funds to a beneficiary. Bank account trusts typically involve a savings account, which is established under a trust agreement.
Explanation
Oftentimes larger banking institutions will offer trust accounts to their customers. These accounts are controlled by a trustee and are funded by a donor, or settlor. Bank account trusts are a convenient way to transfer assets, or income, to the trust's beneficiaries.
While the trustee retains control over the trust's assets, the bank serves as the custodian of the funds. The assets placed in a bank account trust may include cash, common stock, bonds, and even real estate. The account is established using both a name for the trust as well as the trustee's name. The trustee has the right to make a change to the account, including creating sub accounts and closing the account.
Establishing a bank account trust is a relatively simple process, which starts with the funding of a trust by a donor / settlor, naming a trustee and beneficiary, and creating the associated documentation with the help of a lawyer. Once drafted, the trustee may contact the bank to establish the trust account.
