Account in Trust
Candlefocus EditorParents often open trust accounts for their minor children, as the trustee can make sure assets are carefully managed and used appropriately for the children’s benefit. The trustee has a fiduciary duty to act in the beneficiary’s best interest. The trustee can also manage the account assets and move them to a safer investment, if needed, to protect the assets from market swings.
In the event of the account holder's death, Totten or Payable on Death (POD) trust accounts allow beneficiaries to claim the account’s assets without passing through probate. This makes it easier and faster for the account to be settled without costly court proceedings.
Trust accounts can also be set up as "living trusts," which are used to manage an estate while the account holder is alive. This type of trust is often used to distribute inheritances via wills and other estate planning documents. A living trust is usually established with a trust document, frequently called a “trust agreement,” which outlines the roles and responsibilities of both the beneficiary and the trustee.
Overall, a trust account is an important tool for protecting and taking care of a beneficiary’s assets, both during a person's lifetime and after their death. Trust accounts can provide legal and financial protection for the beneficiary and give the trustee the peace of mind of knowing that the beneficiary’s assets are being handled responsibly.