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Diversifying Trust Funds to CDs
My brother and I are trustees for my mother's trust, set up by my grandmother, who passed away several years ago. We'd like to take advantage of diversifying some of the cash available and open up CDs. All the applications ask for a name and Social Security number, but being a Trust we would only supply the Trust name and Federal EIN, correct? Can we open CDs in the name of the Trust, or is there some other account that would be more appropriate?
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 If you are investing funds that belong to the trust, the only way you should open accounts is in the name of the trust, and you are correct that you should provide the trust's EIN. The bank may also ask the trustees for ID information, including their Social Security numbers, but that information should not be recorded as part of the account ownership records. If the bank accepting the deposit knows that you represent a trust, it will be able to help you adapt the deposit applications appropriately.
Be sure to get details of how the account will be covered by FDIC or NCUSIF insurance if the amount of the account is greater than $100,000. Recent increases in that coverage to $250,000 are temporary. The limit will drop to $100,000 per depositor at the end of 2009. Coverage of irrevocable trusts can be very complicated. The bank will need to review the trust documents and may even need to discuss them with an attorney before being able to answer fully your questions about insurance coverage. You can also ask the bank, if it is FDIC insured, if it participates in the CDARS certificate of deposit network, which can provide FDIC coverage for up to $50 million.
Published on BankingQuestions.com 10/21/08
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