A revocable living trust is an estate planning tool that ensures assets stay out of probate. The maker of the trust appoints a trustee, which is usually himself, to maintain control during his lifetime. He also appoints a successor trustee to oversee the trust after his death. If you are a successor trustee, you are responsible for all banking transactions involving trust assets. Although a check made out to the trust cannot be cashed, you can deposit it into the account and withdraw the funds once it has cleared.
If you want access to the money in a revocable living trust, you have to get it from the trust itself; you can't divert a check that's payable to the trust by cashing it, even if you are the trust beneficiary. Checks payable to a living trust must be deposited into the trust bank account. Once the check clears, you can access the funds and distribute it to the beneficiaries as specified in the trust document.
Endorsing the Check
As the trustee or successor trustee, you must endorse the check. Sign your name just as you are identified in the trust document, for example "Jane Doe, Trustee, John Doe Revocable Trust." If another trustee is named, you do not need her signature to make the deposit. However, you must both agree on all matters of trust administration.
Upon the grantor's death, the revocable living trust becomes an irrevocable trust. You must accurately report the gains and losses the trust incurs before distributing the assets to the beneficiaries. If assets remain in the trust, you must report any interest the assets earn that exceeds $600 per year. When the assets are distributed, the beneficiaries are liable to pay the taxes. Since the trust was not a separate entity for tax purposes during the trust maker's lifetime, you must request a federal tax identification number from the Internal Revenue Service to file the return.
Since you are responsible for all banking transactions, you will also need to pay debts, including funeral expenses and administration costs, such as tax preparation. You are required to notify the beneficiaries of the trust when the trust maker dies. A trust does not always specifically name the beneficiaries but may instead use terms like "children" or "grandchildren." If you are unsure who is entitled to receive which assets, you may need to refer to the state's succession laws. If you have any questions, contact a trust administration attorney for clarification.
- Bankers Online: Cashing Living Trust Account Checks
- RCB Bank: FDIC Deposit Insurance -- Revocable Trust Accounts
- FDIC: Ownership Categories Irrevocable Trust Accounts
- Hoopes, Adams & Alexander: Successor Trustee Handbook
- Bankrate: Taxes on a Revocable Living Trust
- Nolo: The Trustee's Job -- The First Six Months