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
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.
Plus, they offer commission free trades for 2 years when you open a new account. Check it out.
TD Ameritrade
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
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?
Shobir says
Personally I’m a fan of Fidelity, I have my pension, investments, ISA and Trust accounts there all in one place. Managing the accounts are easy and although there might not be any branches nearby I found the telephone service to be excellent. I’ve not really heard of TD Ameritrade or Scottrade but will have a look to see what they can offer if I ever need to open another Trust account. Great review, thanks for sharing.
Paul Cook says
The company that I work for uses E*TRADE for issuing cash grants and stock grants, so I thought setting up a brokerage account with them would make life a little simpler. Boy was I wrong.
Etrade was a nightmare when I tried to open a Trust-type Brokerage Account with them. They gave me conflicting directions during my multiple interactions with them during the process to setup a Trust brokerage account. They required mailing trust docs via snail-mail. They obviously do not want to deal with trusts. Etrade has no clue how Trusts operate and function. Never was able to get the trust account setup and wasted my valuable time.
Charles Schwab was very helpful in setting up a Trust account and it was very simple. Never went into an office. I plan to simply ACH (electronically move) the awarded money and stock grants out of Etrade and into Schwab as they vest.
Note that I do NOT work for and am not affiliated with Etrade nor Schwab nor any other financial entity.
Robert Farrington says
Thanks for sharing your experience.
Benita says
I found your forum helpful. I am looking for a firm that doesn’t have a high balance requirement like Schwab’s two hundred and fifty thousand dollar minimum. Any suggestions? I’m new at this, but do very much want to do penny stocks. Trusts and non- profits seem to be difficult to work with for brokerage firms. I tried Trade King last year, and it took them three weeks after intense information exchange to finally inform me they didn’t do trusts.
Robert Farrington says
M1 Finance is our favorite broker as they allow commission free investing. They support Trust accounts with a $5,000 minimum.
Also, Fidelity and TD Ameritrade are solid choices as well with low minimums.
bob says
I have a trust account with Fidelity and their service and paperwork are terrible. Three reps told me how to do something…then another from a specialized unit said it was wrong and had to be re-done. Your heirs will face a real nightmare…hold times to reach the group that handles that are in hours..or days. My co-trustee passed away and I have had to re-title the trust at several financial institutions and Fidelity is by far the worst. It’s so bad that when this process is done, I’m moving all my assets elsewhere.
Robert Farrington says
Where do you think you’ll move to? We’ve research all of them and while I’m surprised by your experience, I don’t necessarily see improvements elsewhere.
bob says
I’ve re-titled the trust at multiple institutions with nowhere near the problem with Fidelity. I suspect they have a management problem…maybe Abigail Johnson will become a poster child for why nepotism is not an optimal succession strategy for a complex enterprise in a fast changing, competitive market. As to where I will re-allocate, Ameritrade and E-trade are possibles..I will need to interview them as neither was among the outfits I’ve done re-titling with. Merrill Edge is a top candidate. Vanguard is also likely…My experience with both has been far better than Fidelity. My comments come from a different perspective…the end game of liquidating a trust…prospectively, I would choose Fidelity as you did, but my experience turned me around 180 degrees.
Sergio says
Hi. I just transferred assets from several financial institutions to a newly created revocable trust. The best by far was Charles Schwab: the entire process can be done online — you can upload a pdf file of your trust certificate — , and approval is automated and immediate. Fidelity and Vanguard were OK, but, like you said, required some paperwork and, in the case of Fidelity, office visits. Unlike Fidelity, Vanguard accepts e-signatures, and you can e-mail the signed forms. Banks were the worst. It took Citibank Brokerage 4 months to get the job done, with a substantial amount of prodding. Chase was not as bad as Cit, but still more complicated than Fidelity or Vanguard.