Living Trusts and Bank Accounts

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Frequently, a trust grantor sets up a living trust to pass on assets to heirs, relatives and charitable organizations. A number of account options are available to trust grantors and trustees seeking to organize payments and defer assets held by a living trust.

Totten Trust Account

A “Totten Trust” is a financial account that permits a trust grantor to hold money for a beneficiary. The account can be made “payable on death.” A trust grantor or successor trustee will serve as the owner of the account until the trust grantor’s death. An original trust deed is required to set up a Totten Trust account. A trust grantor can set up a Totten Trust account through a commercial bank. Only a trust grantor, co-trustee or successor trustee can sign and date a deposit contract, which is the instrument used to create a Totten Trust account. A deposit contract must have the names of the parties involved in the trust and the name of the individual who will benefit from the account. Make the account "payable on death" and name yourself as the “TTEE,” Trustee of the account. Endorse the deposit contract to complete the account set-up process.

Interest-Bearing Account

A successor trustee is required to take reasonable steps to bring a return on the assets held in a living trust’s name. One way to do this is to set up interest-bearing accounts. If a trust owns a substantial amount of wealth, an interest-bearing account can produce a favorable monthly or annual return on the deposited money.

Financial Account

A successor trustee is obligated to distribute assets while meeting the needs of beneficiaries. To minimize taxes, a successor trustee is likely to distribute trust property over time. It is wise for a successor trustee to shelter earnings, dividends from investment accounts and profits from the sale of trust property in a financial account until those assets can be distributed to beneficiaries.


Setting up a standard checking account for a living trust makes bill paying easier. It is common for a trust to have an estate attorney, tax attorney, accountant and financial advisor on payroll. Depending on a trust’s gross assets, other experts may also be required. Whether a trust is paying for one-off services or regular expenses, a checking account makes it easy to manage and track payments. A standard checking account can be set up at a commercial bank. Provide a Social Security number or Employer Tax Identification number to get started.


About the Author

Charlie Gaston has written numerous instructional articles on topics ranging from business to communications and estate planning. Gaston holds a bachelor's degree in international business and a master's degree in communications. She is fluent in Spanish and has extensive travel experience.