Syndication Check Payable to Trust: Depositing to Personal Acct

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Syndication Check Payable to Trust: Depositing to Personal Acct

Mark S.Pro Member
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes

I had my attorney create a revocable living trust for me several years ago for estate planning purposes.  I use this same trust to hold my real estate syndication investments (again, for purposes of estate planning and easy transition upon my death). 

I've asked my attorney on several occasions to confirm that I am able to write a personal check (from a personal checking account) to fund these syndication investments and still be able to use my trust.  He confirmed on multiple occasions that yes, I am able to do this, so I did.  My personal accounts have a POD/TOD beneficiary, so for purposes of easy transition upon my death (and to keep things simple - at least that was my goal) they effectively function the same way as a trust account would (only they're not technically trust accounts).

Most of my periodic cash flow from these syndications comes back into my personal checking account via ACH.  It's never been an issue.  One of the syndications just exited and they are mailing checks back to the investors.  I'm guessing my check will be titled in the name of my revocable living trust (instead of me personally, since that's how I structured the investment).

My question is whether or not I will be able to deposit a check made out to my revocable living trust into my personal checking account.  I am the trustee of the trust.  Will I simply be able to just sign my name, trustee, Mark S's revocable living trust and deposit to my personal account? 

My fear is the financial institution may require me to have and deposit into a trust checking account instead.  Not the end of the world, except I wouldn't really ever use said account other than for situations like this and I'd rather keep it simple.  A couple of the credit unions I use are out of state and are picky about certain things; I have a feeling I may not be able to open up a trust account remotely.  I could always ASK THEM, but then I feel like it's asking for permission vs foregiveness.  What I want to avoid is depositing it into my personal account, it get rejected, and then I have to go back to the syndicator to get them to cut another check. 

Has anyone had a similar experience before?  I feel like it shouldn't be so complicated.  Yes, I can go to a local credit union and just open up a trust checking account, but I'd rather not do that if I don't absolutely need to.  Thanks in advance for any feedback.

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Mike S.
Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
6y

@Mark S.

When I created my living trust I went to all my banks to have all my accounts retitled to the living trust.

The checks and debit cards still have my name on it but the official owner is the trust. Most banks have no problem retitling the account. It does not change anything on a daily use basis.

Only credit cards are still on my name and not the trust.

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  • Mike S.
    Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
    6y

    @Mark S.

    When I created my living trust I went to all my banks to have all my accounts retitled to the living trust.

    The checks and debit cards still have my name on it but the official owner is the trust. Most banks have no problem retitling the account. It does not change anything on a daily use basis.

    Only credit cards are still on my name and not the trust.

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  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    6y

    @Mark S.

    I agree with what @Mike S. stated. However, it depends on the bank you're using. I think most larger banks are sophisticated enough and have covered such cases in the past, where smaller institutions may not have been exposed to such cases and may give you a hard time. In the latter case, I'd consult your estate attorney on the best course of action with the incoming wire/check. Congrats on exiting a syndication deal, hope it is a success!

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  • Brent Shields
    Rental Property Investor · Sacramento · Member since 2019 · 129 posts · 108 votes
    6y

    I have several different accounts in trust names, and my experience has been that every bank is different.
    Some care and some don't, just be ready for all types of responses. I have even had a bank take checks for 6 months then one day out of the blue just say from today on we will not take trust checks any more in this account.
    I have also had banks tell me that I can't deposit checks made out in my name into an account held by a trust.
    It also makes a difference the amount on the checks if it's under $1,000 then most banks don't care too much. Once it goes over $100,000 then most banks start caring.
    And I have one bank that most of the tellers will not take my checks, but two tellers will, so I sometimes wait around utill one of the check friendly tellers are available.

    That's been my experience, your mileage may vary.

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  • AJ Singh
    Rental Property Investor · Orange County, CA · Member since 2016 · 512 posts · 374 votes
    6y

    @Mark S.

    retitling one of the bank account to trust seems to be the easy answer.

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  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    I have cashed Trust checks by signing my name , trustee for XX Trust, and signing my name again as endorsing the check my self for the account it is being deposited into.  It would not be any different that getting a check to "John Doe" and John Doe endorsing it to you then you endorsing it to deposit it.  If your bank takes checks like this you are fine.  Some do, some do not.  Sometimes you have to explain it like I just did.

    Also, I'll give you some unsolicited advise here.  For estate planning purposes what you are doing and how you are managing the crossover between accounts it fine.  You can take out of and put into a revocable Trust at will when you are the Trustee and it is yours.

    However, you are loosing the asset protection part of the Trust.  If you keep the Trust income and expenses separate from your personal money then should you ever be involved in a law suit your personal money would not be reachable.  So if you opened ONE Trust account, which you can do by presenting the Trust data/fact sheet at a bank, then have all the income and expenses for the Trust go into this account directly.  When you want to add money to the Trust you can write a check to the Trust, same if you want money out, write yourself a check and cash it in another personal bank account.  By always having Trust income and expensed going into and out of the Trust account directly then you have separated the Trust assets from your personal assets. And by paying your personal expenses through a different checking account.   Now in a lawsuit your Trust assets are the limit of what can be taken from you.  The other assets are not part of the Trust. so they are protected from someone who  would sued for something relating to a rental in the Trust.  And if they sue you personally, you can have it dismissed because the lease, house,  etc. are all with the Trust.

    Personally, I have a Trust for my houses--the one I live in, second house, house my special needs adult daughter live in, and 2 other trusts for rentals (higher risk rentals in one, lower risk rentals in the other).  That provides more separation and protection for me.  And vehicles are not in any Trust because they are high risk.

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  • Mark S.Pro Member
    OP
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    6y

    @Lynnette E.,

    Thank you for your feedback, however, I would be very careful about the legal advice you’re essentially giving here.  

    My understanding is that a revocable living trust does not provide any asset protection. I have an LLC for that. The reason I had the revocable living trust set up is for estate planning purposes. Investing in a syndication as a limited partner, as I do, with my revocable living trust (for estate planning purposes) does not provide any liability concerns for me. My single family rentals, on the other hand, are held by my LLC and also have great liability insurance with the LLC listed as an additional insured. Two completely separate things.

    There are many types of trusts out there and perhaps you're referring to something other than a living revocable trust, but I am not worried about any "co-mingling" of funds between my personal name and my revocable living trust (as it's not an asset protection issue) like I would be with my personal name and my LLC (which is set up for asset protection).

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