My mother had a trust and a will. The only asset in the trust was a bank account which I used incapacitation prior to her death to become trustee. Her house was titled in her name. Her trust defines establishment of a reservoir trust upon her death. Also, her will leaves properties not in the trust to the reservoir trust. I am sole beneficiary, as well as executor of the will.
Two questions: One - Do I need to have the bank account moved to the reservoir trust? Can I continue to operate on that account as is because there are mortgage and other payments using that account until her property is dissolved. Second, do I need to establish EIN for reservoir trust prior to probating the will, or can I wait?
1 Answer from Attorneys
I hope this is not too late a an answer. Sounds like it might be. But here goes:
First, the question is whether the reservoir trust will be short-term or long term in operation? You say you are the beneficiary of the trust, which make me suspect that you might be receiving regular payment form the trust or benefits over time.
If the terms of the trust and your plans for operating it are just that it will collect all of the assets and then in a short time distribute them -- from the trust -- then it really isn't worth the other steps.
However, if the trust will operate over at least a year or more,
then YES I think you should set up a bank account for the trust itself and move all the money to the trust bank account.
If the current bank account is your mother's, for a short term there is really nothing wrong with using it.
But establishing a bank account just for the trust and using it for all money makes things CLEAR and provable that all of the money was handled properly according to the terms of the trust.
Same with anything else. This is one part of a trust that can be a bit of a burden. You may need some kind of document (depending on what it is) DOCUMENTING that the other items have been transferred to the trust and are now owned by it.
The problems arise mostly where there is a lack of clairty. Something was owned outside of the trust. Now you make a mental note that is in the trust. But the past history makes it unclear if or when it became owned by the trust. But creating a clear paper trail is important.
About probating the will, you don't have discretion about when to probate it. Most people misunderstand these things. Whoever is the executor or if no executor will do it a close family member must go to the Circuit Court probate office and start the process. They are often very reasonable when the amount of property (not in the trust) is small.
So you can't wait for anything to start probating the will.
If the reservoir trust is going to operate for any length of time, you should get a separate EIN for the trust.
These days it is easy. You can get an EIN on-line from the IRS website instantly or fax in a form and get an EIN within a day or two.