It is impossible to think about living in the modern world without having a bank account. Nonetheless, what happens to someone’s bank account upon death? If the decedent’s checking and savings accounts are titled solely in his/her name, the account will go through probate.
Therefore, the best idea to protect your loved ones upon death and ensure they have access to the funds held in checking and savings accounts is by transferring them to a living trust.
In this article, you will discover why bank accounts should be included in a Florida living trust.
Should Bank Accounts be Included in a Florida Living Trust? – An Introduction
A trust is a legal arrangement in which you (trustor) transfer the ownership of certain assets to a trustee (fiduciary) for the benefit of one or multiple beneficiaries. A living trust is a revocable trust, which means the trustor can change, amend, or revoke the arrangement up until his/her death.
Specifically, a living trust is a trust that permits you to name yourself as the trust’s trustee, designating a successor trustee in the event of death or incapacitation. Therefore, it is possible to retain control of the assets while transferring ownership to the trust.
The main purpose of the trust is to prevent uneventful situations if things do not go as expected. Hence, if you include one or multiple bank accounts in a Florida living trust, you will be protecting your loved ones from stressful situations.
In Florida, three main situations justify the transferring of a bank account to the name of a living trust:
- If the trustor becomes incapacitated, the account is frozen
- If the trustor dies, the account is frozen
- If the account is titled in the name of a person, it is exposed to identity theft in case of exploitation of vulnerable individuals (especially elderly individuals)
When you decide to transfer the ownership of checking or saving accounts to trust, it is possible to avoid these events altogether.
If you have a living trust in place, your trustee (or successor trustee) will administer all the assets held in trust, paying your bills, responding or objecting to creditors’ claims, managing the property, and investing on your behalf.
In such cases, the banking entity will need to adjust its records and the trust agreement must be drafted (or amended) to include specific language. As a consequence, transferring a bank account to a living trust requires strategic legal guidance.
Should Bank Accounts be Included in a Florida Living Trust? – Probate Avoidance
When someone dies in Florida, any assets titled solely in the deceased person’s name must go through probate. Depending on the size and value of the decedent’s estate, the date of death, and other factors, probate might be one of the worst experiences you can get involved in.
The decedent’s assets are distributed only after the entire probate process is concluded. Meanwhile, all the accounts held in the decedent’s name will likely remain frozen, exposing his/her family to unnecessary stress.
In case the family needs to access the decedent’s accounts to pay bills and living expenses, the only solution is filing a «conservatorship» lawsuit in court. Any lawsuit affects the time frame of probate, extending the processing time and creating even more problems.
Therefore, the best approach to an unpleasant outcome is transferring the title of any bank account(s) to a living trust. This way, the trustor can continue to control the account while protecting his/her interest(s) upon death.