Protecting CDs in Trust Accounts

There is a lot of misunderstanding about trusts.

In the video below, Dan Danford, CFP®, CRSP®, MBA, and Founder/CEO of Family Investment Center, answers this question about bank CDs and trust accounts:

"How do I purchase bank CDs and make sure they are protected in my trust account? I purchased one already, thinking that because I used trust fund money to buy it, it would be held in the trust. It isn't and I don't want to make the same mistake twice. Also, is there a way that I can move the existing CD into the trust without penalty?"

Estate Planning Essentials

Wills and trusts are two different types of estate planning devices that allow you to look into the future and determine how you can protect your children and your assets if something were to happen to you.

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, says that many people use the terms wills and trusts interchangeably even though there are major differences between the two.

In the video below, Danford explains the disparity and in what situations people are more likely to need a will or a trust. He also suggests that any asset protection estate planning document should be handled by an attorney. According to Danford, a small fee can ensure a lifetime of peace of mind.

What’s in a name, er, license plate?

By Dan Danford
Principal, Family Investment Center

Roll back the clocks to 1985. Missouri opened the door to a new avenue of self-expression: the vanity license plate. At the time, I was driving a well-used Plymouth Horizon hatchback, with nearly as much rust as paint. It certainly wasn’t glamorous, but it was what I could afford as a junior trust officer at First National Bank. Banking, in those pre-TARP days, didn’t pay so much!

I rushed down to the Department of Motor Vehicles and applied for personalized plates. I’m sure I requested “TRUST” and a couple of similar derivatives. The plate I eventually got was “ITRUST.” I’ve owned it ever since.

I stayed in the trust business until 1998 when I started Family Investment Center. I worked for three different trust organizations, and drove a dozen different cars. A few were “company cars” and the plates have been shifted back and forth among at least three different corporations. Today, they belong to Family Investment Center and are attached to my 2007 Jeep Cherokee. I’m not directly in the trust business today, but it’s related to what we do, and people have grown used to seeing my car and plates.

The most common query I get involves religion. People ask if I’m a preacher. “No,” I answer, “but I do trust God.” There was a period where Missouri’s plates used the same font for both 1 and I. Then, people would ask what “1Trust” meant.

Once, a national trust journal used a photo of my plate to illustrate an article about industry entrepreneurs. That was kind of fun, and I’ve still got a reprint of the article someplace.

The funniest was with one of my earlier cars (maybe the aforementioned Dodge Horizon. A guy on the street asked why I’d publicly announce that IT RUST? A fair question, that.

My wife is a school counselor (where she’s been recognized as one of the top in our state.) I devised the perfect plates for her, and she’s had them a similar period of time. ILISSN. If you ever see them parked together, you’ll know where to find the Danfords!

How trusts work

By Dan Danford

News broke today of Michael Jackson's will, which was filed in court. Mr. Jackson left his estate to a trust. This prompted the question, "What is a trust? How does it work?" and we're happy to answer that here.

The concept of trust originated in the Middle Ages when crusaders left someone behind to care for their family and property. The trustee watched over their stuff and made financial or other decisions on their behalf. If necessary, they bought and sold property, reached investment decisions, or spent money for necessary items. Legally, they "stood in" for the missing person.

Today's trust is similar. It's a legal form of ownership with several key parts. The Grantor is the person creating the trust. The Trustee is the person (or institution) who stands in the grantor's place. The Beneficiary is the person for whom the trust exists. In a so-called living trust, the same person can serve in all three capacities. However, a Successor Trustee is named to take over when the trustee is unable or unwilling to serve. Trustees can be a bank, trust company, or friend.

In estate planning, the trust is an important vehicle because it allows a trustee to care for and invest for a beneficiary, often long after the grantor is dead. It's a way of assuring that a spouse, children, or grandchildren get professional guidance for taxes and investments. It's also a way to establish some guidelines about how money should be invested or spent.

Importantly, a trustee has a fiduciary duty to beneficiaries. That means a legal duty to serve in their best interests. Decisions must be made according to the best interest of each beneficiary, without conflict. For this reason, a trust can be a good way to care for important friends or relatives after we are gone. Especially if they are young, inexperienced, or have special needs.