Hello all, my wife and I are new here. We are looking forward to learning a lot here.
First, a quick summary of our situation. We own two rental properties here in our home town. My wife's father has been managing our properties for years and we have decided to make a few changes.
First, we went to an attorney, created a trust, and moved the properties into the trust. Second, we are meeting with a professional Property Manager in the morning and she will be taking over Property Management going forward.
Our question for today revolves around creating a new bank account and managing the financials.
We know we are going to open a new bank account but we are unsure of what kind. Obviously, if we went the LLC route, we would be opening a business checking account. However, since the properties are in a trust, we are not sure if we should get a personal checking account, bank trust account, or other. Since we are the trustees of our trust, we don't see a big benefit in opening a bank trust account since we don't need someone else to manage the funds. For this reason, we are guessing a personal checking account? Something else?
Thank you for your time and we look forward to hearing some responses.
Sorry for the typo in the title of this thread. Not sure how to edit...
Could be wrong but here’s what I’d do. Create an “operating llc”. It’s an llc you put on your leases and etc.
Get s bank account for that llc.
Depending on the bank a trust account will be considered a personal account or a business account.
I created a living trust for my estate planning and retitled my personal accounts accordingly. Some banks kept it under the personal account agreement, some made me switch to a business account agreement.
What type of trust did you use? If it is a grantor trust or a land trust, why did you appoint yourselves as the trustee?
A grantor living trust is for estate planning. You are the grantor, the trustee and the initial beneficiary. At your death, you have a successor trustee(s) and successor beneficiary(ies). Basically, while you are alive, you are still doing everything you want with your property. However, at your death, you avoid probate completely.
A land trust is a different kind of trust, and for these ones, you want a different trustee (for anonymity on the property records and also to avoid the risk of voiding the trust), and usually your beneficiary would be an LLC. I never opened any bank account directly for them, but for the LLC.
There is also, for estate planning, the Lady Bird deed, that also avoids probate on your homestead property, but avoids too in some states some detrimental side effects for Medicare of the living trust.
I'm not really sure if this is still alive, but I can tell you I operate a couple of properties as a rental business that are titled in the name of an irrevocable trust and I am one of the trustees. When the trust became irrevocable at the time of my mother's death, I had to apply for a TIN (Taxpayer Identification Number) and then opened a business bank account in the name of the trust. I currently conduct all business in the name of the trust, but I am planning on moving title to a holding LLC and creating an operating LLC to reduce the exposure to trust assets. My big question and I am still looking for an answer is can I get conventional financing without affecting my personal ability to borrow? (But I guess that is for a different forum.)