I wrote a month ago how I was opening a trust account for the revocable living trust we created as part of our estate planning. Well, creating the trust was step one, and lately, we've been working on executing the trust (meaning we're moving all the assets into the trust).
For some things, like transferring our house, our lawyer took care of it. For other things, like our investments, we had to take care of it. And after going through the process, I was surprised at how difficult it was to get a broker to open a trust account an then transfer all of our different assets and accounts to it.
Sadly, it seems that having a revocable living trust is not as common as it should be. And it's even more rare for people to have a brokerage account (and not an IRA) that is owned by a trust.
The Process Of Opening A Trust Account
For the most part, every broker can open a trust account for you - but the surprising thing I discovered was how unwilling several brokers made it. You'd think that every broker (online and offline) would want the business. That just wasn't the case. I heard several excuses, but I could tell the root cause was that they didn't want to deal with it.
When you're going to open an account for your trust, you have to go into the office, or you will have to mail in all of your paperwork. For whatever reason, you CANNOT open a trust account online. Even on sites like Fidelity, you can only print off the application - you still need to mail it in.
I found that going into the office was a better bet anyway, because the paper work is confusing. My guess is, if you mailed it in, you'd probably have to go into the office anyway to fix your original application. So, save your self the time, and go into the office. That's one of the reasons why we recommend Fidelity and TD Ameritrade as our discount brokers of choice - they both not only offer low prices (and free in some cases), but they have branches located in most cities that can help with this stuff.
Finally, just opening the account is part one. Then, you have to transfer your assets into your new account. And you really need your broker to help you with this, because I was surprised to see how difficult the transfer process was. The big hang-up that most accounts faced was name: we were moving from individually named accounts to the trust.
For whatever reason, a couple of accounts we had at another broker really didn't like this and were giving us problems that took a bit to resolve. We had to send it copies of our birth certificates and other documents to facilitate the transfer, which I've never had to deal with before.
After going through the process, I wanted to highlight the best brokers I encountered and the one I chose for my trust account.
The Best Stock Broker For A Trust Account
I really looked at three different brokers when I went about opening my trust account. I didn't really look at the cheap investing sites I've mentioned before, because I needed more with my trust account than cheap options trading. Plus, most of those don't have branches - they're cheap because they are almost exclusively online.
Fidelity started out as my first choice for opening a trust account, because I've used them before with my mom's trust account and I really like their interface. However, the paperwork became challenging and I decided to look at other options. I eventually did end up deciding to go with Fidelity and I'm glad I did - they really went the extra effort to make sure that everything went smoothly.
TD Ameritrade was another broker I looked at, simply because I love their low cost investing, and they do have some offices. TD also has the easiest website options for opening a trust account, which was nice. We also love TD Ameritrade because they offer a free IRA, so I was hoping that there would be something similar with their trust accounts. In the end, we went with Fidelity, but TD Ameritrade was a strong runner-up.
E*Trade was my third choice for a trust account because I use E*Trade for my Solo 401k. We found E*Trade to offer the best Solo 401k plan, so we strongly considered them for opening a trust account. They required a lot of paperwork and essentially going to an office as well, but what held me back was their higher commission prices and ease of use. Short of our Solo 401k, everything else we have is at Fidelity. However, if most of our investments were at E*Trade, we'd consider it even more.
Tracking Our Trust Account
Finally, it's important that we track our accounts. I'm giving Personal Capital another try, and I'll share why in another post, but I'm liking them again for online portfolio management. If you haven't tried Personal Capital (which is free), I highly recommend that you see if their free software works for you.
Do you have a revocable living trust? Do you have a broker that you like for your trust account?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.