Successor TrusteeA successor trustee walks in to one of your branches or calls your service center. Maybe they’re an existing customer. Maybe they chose your bank because that’s where their recently deceased parent has his or her accounts. Either way, this is a terrific opportunity… and chances are high your employees aren’t ready for it.

As our population ages, dealing with a deceased person’s living trust will arise more often. It’s a chance to earn new customers, deepen existing relationships—or not. My personal experience with the “not,” and a notary’s pithy summation, inspired this article.

Half of the Picture

Reasons for creating a living trust are fairly well-known, especially among baby boomers, many of whom persuaded their parents to create a living trust, too. What is not common knowledge are the prosaic details of what successor trustees must or may need to do.

For myself, the half-picture included my mother’s thorough preparation. At my request, she smoothed the transition for accounts and safe deposit box by adding me as a signer. I and my siblings each had a copy of her trust document, and we knew its largest asset (her home) would be sold.

Pressing tasks were made clear after Mom passed. Hospice social workers and others handed me checklists covering death certificates and notification of Social Security, Medicare, former employer, etc.

Common sense and bills that continued to arrive created another checklist with things like contacting utility companies, notifying insurance agents, and finding a gardener because my own skills would have killed even the drought-happy plants in my mother’s yard. These are the modern day equivalent of “chop wood, carry water”; ordinary tasks completed with sorrow on our shoulders.

The Missing Half, and Missing Advice

As grief gave way, hints of other tasks began to pop into awareness but the need to complete them was not at all clear. Did I really need to lodge my mom’s will? Since I was a signer on her accounts, would I really need to open a trust account?

Research on the web, and conversations with CPAs, an estate attorney, and knowledgeable friends generated equally-convincing and conflicting information. I eventually turned to those I thought could answer the second question once and for all: bankers.

What happened next took place with a dozen representatives from three different banks (two major, one community) and one credit union. For simplicity’s sake I’ll refer to all of them as banks.

“Do I Really Need a Trust Account?”

My initial inquiries at all four financial institutions were answered with some form of, “we can’t give you legal advice.”

Frankly, this is an asinine response. If a new business owner asks if they really need a business account, service representatives will happily answer. These reps should have the training they need to also answer a basic question about trust accounts.

An experienced banker finally answered “maybe,” explaining that if there would be checks payable to my mom’s trust then I’d need a trust account. At first this seemed unlikely, but then I realized various refund checks would be generated (and would add up). An escrow officer sealed the deal when she explained escrow companies in my area distribute to the trust, not to individual beneficiaries.

We Can’t Use That

Having decided to open a trust account, I started with the bank that held the mortgage on mom’s house, as well as our joint accounts: Bank A. After expressing condolences and copying the trust document and death certificate, the account rep looked up—but could not find—procedures for opening a trust account.

Over the next hour this rep sought help from another account rep, the branch manager, and called internal operations. He needed each of those because I pushed-back against rejection of the trust document: one by one, each person told me they were not legally permitted to use it.

California law does indeed prohibit financial institutions from requiring the full document, but they are certainly permitted to require relevant pages. The real issue is that reps don’t know what to look for; which creates errors, which creates fuzzy policy like the one these guys thought they were following.

This has been the case since I was a branch banker over 25 years ago. Rather than provide clear procedures, reps are still expected to get help from others—which is not necessarily available or accurate.

Get a Lawyer, Go to Court

After telling me they could not use the trust document, these reps told me I needed to go to court to get the form they could accept. What was that form? They weren’t sure, I’d have to get an attorney. Knowing most of this was far from the truth I decided to call it a day and try another bank later.

We Require Both

I next tried the bank where I have business and personal accounts. The account rep again needed help but gamely emailed back and forth with their operations group.

This time they required the full trust document and a completed “Certification of Trustee Under the Trust” form, which was handed to me. (Ah ha, the form!) Requiring both made no sense but I headed home to complete the lengthy form, which turned out to be a hot mess.

Forms Should Make Things Easier

The form was full of confusing references, including calling me three different things (“declarant,” “current trustee,” and “Settlor” — which was also wrong), and typos that would throw most readers off (e.g., “relation” instead of “related”).

Key paragraphs switched from third-person (“declarant”) to first-person (“to the best of my knowledge”) and back again, forcing me to reread to ensure I understood the meaning. And, rather than select applicable powers, I was to “strike” any I “may not exercise.” Translation: Cross out any that do not apply (a reverse instruction bound to create all kinds of nifty errors).

Operations’ Turn to Mess Up

As I waded through the form, the banker called to relay concerns from the operations department. They didn’t like the notarization on the trust amendment which updated my last name. (Mom, in her extra-careful way, had both types done.) They also didn’t like that Mom’s name was sometimes shown with the middle name of Ann (um…that’s my middle name, as shown on the driver’s license copy they also required) and sometimes with the initial A (the trust document shows just her middle initial, as well as mine, which are both “A”).

With ever more hassle dropping into the “use Bank B” column, Bank A wasn’t looking so bad. Now that I knew what form they wanted, I could blend research with my forms-creation and procedures expertise and go from there.

Forms Galore

The web revealed many possible forms. Most were from investment services companies and only some items would apply to everyday banking services. One generic form that kept coming up was quite straightforward but was missing the part that confirms the power to open accounts. (As in accounts like the one I was trying to open.) I spent the evening blending the best of these into something I thought Bank A might accept, then shut off the computer for the night.

The next morning, I called Bank A’s operations director and asked to email the form for her review. Sure, she said. (Gotta love that direct contact!) She called back late that afternoon. “That form is too complicated,” she said, “we don’t need all of that.” And then offered to email me a form to use.

What the heck!? I thought, but instead calmly asked why she didn’t offer me that form in the first place. “We’re not supposed to,” she explained, “we only use it when customers can’t get one.” And then added this tidbit, “It’s just something we got off the internet.”

The form turned out to be the same generic version I had found—the one missing powers to open and use deposit accounts. By now I had wised-up and didn’t bother to raise this glaring omission; just completed the form and headed to a notary to make it official.

The Notary Inspires Freebies

As the notary and I chatted, I learned problems like those I encountered are common, Or, as he put it, “Big banks, little banks, credit unions—they all screw it up.” So here you go, California banks and credit unions, three freebies ready for your use:

  • For internal use: An overview of the issues, including how to tactfully position the requirement for the form, how to help customers complete it, and how to answer the question about whether they need a trust account.
  • For customers: Form instructions which tactfully positions the requirement, tells them how to complete the form, and answers the question about whether they need a trust account.
  • The form itself: Certification of Trust form as per California Probate Code 18100.5, including that famous power for accounts

You’re welcome to use the content or contact me for customizing and branding each one.