What it means to put a bank account in trust
Putting a bank account in a trust means changing the account's ownership so that a trustee — a person or institution you name — holds legal title to the money on behalf of beneficiaries you choose. The account itself stays at your bank. You are not moving money or opening a new account; you are changing who the bank recognizes as the owner and who can access it after you die or become unable to manage it.
The main reason people do this is to avoid probate — the court process that normally distributes your assets after death. Money in a trust passes directly to your beneficiaries without a judge's involvement, usually within weeks instead of months or years. A trust also lets you name someone to manage the account if you become incapacitated, without requiring a separate power of attorney document.
The process involves three steps: creating a trust document (or using an existing one), retitling the account in the trust's name, and naming a successor trustee to take over if you cannot. You do not need a lawyer for all of this, though one can help if your situation is complex.
Key Takeaways
- Retitling an account in a trust's name requires a new signature card and proof of the trust document at your bank; the process usually takes one to two weeks.
- You can create a trust yourself using online templates or software, or work with an attorney; costs range from free to several hundred dollars depending on your choice.
- A revocable trust lets you change or cancel it anytime during your life, while an irrevocable trust cannot be changed and may have tax consequences.
- After retitling, you continue to use the account normally; the trust only takes effect when you die or name someone else as trustee.
- Some banks charge a small fee to retitle an account, and a few require the trust document to be notarized before they will process the change.
Decide what type of trust fits your situation
The most common choice is a revocable living trust, which you can change or cancel at any time while you are alive. You remain in control of the account, can withdraw money, and can name yourself as the initial trustee. When you die, the trust becomes irrevocable and passes to your named beneficiaries without probate. This is the right choice for most people who want to avoid probate and keep flexibility.
An irrevocable trust cannot be changed or canceled once it is created. Money in an irrevocable trust is no longer legally yours, which can have tax benefits in some situations but also means you lose control of it. Irrevocable trusts are less common and usually only make sense if you are trying to reduce your taxable estate or protect assets from creditors. If you are unsure whether you need an irrevocable trust, start with a revocable one.
You should also decide whether you want a joint trust (if you are married and want one document covering both spouses' assets) or an individual trust. A joint trust is simpler to manage but less flexible if circumstances change. An individual trust gives each spouse separate control but requires two documents.
Create the trust document
You have three options: use an online template or software, hire an attorney, or work with a document preparation service. The choice depends on your budget and how complex your situation is.
Online templates and software like LegalZoom, Nolo, or Rocket Lawyer cost between $100 and $300 and walk you through questions about your beneficiaries, assets, and who you want as trustee. You fill in the blanks, print the document, sign it in front of a notary (usually required), and keep it with your important papers. This works well if you have a straightforward situation — one or two beneficiaries, modest assets, no minor children with special needs.
An attorney typically charges $500 to $2,000 for a revocable living trust, depending on your location and the complexity of your estate. An attorney is worth the cost if you own real estate in multiple states, have a blended family, own a business, or have significant assets. They can also coordinate the trust with your will and power of attorney documents.
Document preparation services like LegalShield or local paralegal services fall between the two in cost and formality. They prepare the document based on your answers but do not provide legal advice. This can be a good middle ground if you want professional preparation without attorney fees.
Retitle the account at your bank
Once you have a trust document, contact your bank and ask to retitle the account in the trust's name. The bank will ask for the trust document itself (or sometimes just a certification page) and will have you sign a new signature card. The account number usually stays the same, but the name on the account changes from your personal name to something like "Jane Smith, Trustee of the Jane Smith Revocable Living Trust."
Bring the original trust document or a certified copy to the bank. Some banks accept a one-page certification signed by a notary stating that the trust exists and you are the trustee; ask your bank which they prefer before you visit. A few banks require the entire trust document to be notarized, though this is less common. The process usually takes one to two weeks.
After retitling, your account works exactly as it did before. You can deposit, withdraw, and transfer money normally. You do not need to file anything with the IRS or your state. Your Social Security number remains the tax identification number for the account.
Some banks charge a small fee (usually $25 to $100) to retitle an account. A few charge nothing. Call ahead and ask whether there is a fee before you go in.
Name a successor trustee
Your trust document should name a successor trustee — the person or institution who will take over the account if you die or become unable to manage it. This person does not have to be a family member. Many people name an adult child, a trusted friend, or a bank's trust department. Some people name co-trustees so that two people must agree before moving money.
The successor trustee's job is to notify your beneficiaries, gather the account statements, and distribute the money according to your instructions in the trust document. They do not need to go to court. If you name a bank or trust company as successor trustee, they will charge a fee (usually 0.5% to 1% of the account value per year) to manage the distribution, but they handle all the paperwork.
Make sure the person you name as successor trustee knows they have been named and understands what the job involves. Give them a copy of the trust document or at least tell them where to find it after you die. If you do not name a successor trustee, a court will have to appoint one, which defeats the purpose of the trust.
Update beneficiary designations if needed
If your account has a beneficiary designation on file at the bank (a form naming who gets the money if you die), you should update or remove it now that the account is in the trust. The beneficiary designation overrides the trust, so if you leave it in place, the money will go to the named beneficiary instead of through your trust to your chosen heirs.
Contact your bank and ask whether the account has a beneficiary designation. If it does, ask them to remove it or change it to "per stirpes" (meaning the money goes to your estate, which then distributes it through the trust). Some banks will do this over the phone; others require a form. Do this before you leave the bank after retitling the account, if possible.
Keep the trust document safe and tell your family where it is
Store the original trust document in a safe place — a safe deposit box, a home safe, or with your attorney. Make copies for your successor trustee and your beneficiaries, or at least tell them where the original is kept. If the document is lost or cannot be found after you die, your beneficiaries may have to go to court to prove the trust existed, which costs time and money.
You should also keep a list of all your accounts that are in the trust, along with account numbers and the bank's contact information. Leave this list with the trust document so your successor trustee knows which accounts to look for. Update the list if you open new accounts or close old ones.
Review your trust every few years, especially after major life changes like marriage, divorce, the birth of a child, or a significant change in your assets. If your situation changes, you can amend the trust with a document called a codicil or create a new trust entirely. A revocable trust is designed to be flexible, so do not hesitate to update it.
Frequently Asked Questions
Do I need a lawyer to put my account in a trust?
No. You can create a trust using online templates or software and retitle the account yourself. A lawyer is helpful if you own real estate, have a complex family situation, or have significant assets, but not required for a simple revocable living trust with one or two beneficiaries.
Will putting my account in a trust affect my taxes?
No, not during your lifetime. A revocable living trust is treated as part of your personal estate for tax purposes, so you report the interest and dividends on your personal tax return just as you did before. After you die, your beneficiaries may owe taxes on the money they inherit, depending on the amount and your state's laws, but the trust itself does not create a tax bill.
Can I still access my money after I put it in a trust?
Yes, completely. When you are the trustee of your own revocable living trust, you have full access to the account. You can withdraw, deposit, and transfer money as you normally would. The trust only changes who controls the account if you die or become incapacitated.
What happens to the account if I become unable to manage it?
Your successor trustee can step in and manage the account without going to court. This is one of the main advantages of a trust. Without a trust, your family would have to file for guardianship or conservatorship, which is a court process that takes weeks or months and costs money.
Can I change my mind after I put the account in a trust?
Yes, if you created a revocable living trust. You can retitle the account back to your personal name, change the beneficiaries, or cancel the trust entirely. Contact your bank and ask to retitle the account. The process is the same as putting it in the trust in the first place.