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Is there any downside to naming a trust as a beneficiary to a CD or in general, a bank account if the bank and/or credit union allows it? This is in California.

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  • What sort of issue are you anticipating? Commented Jan 11, 2023 at 18:58
  • Ally Bank lets you do it. Don’t know if there are state-level restrictions, though.
    – RonJohn
    Commented Jan 11, 2023 at 20:10
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    The last time that I updated my trust documents, I asked my lawyer this same question. His response was that it's OK but it adds an extra step for your trustee in settling your estate. The absolutely correct answer is that you should ask your lawyer this since it's possible that state law may vary. Commented Jan 11, 2023 at 22:34
  • One drawback compared to having the trust own the accounts outright is that in case of incapacity the trustee won't be able to access the accounts (you'd need DPOA instead and a longer and more complicated process)
    – littleadv
    Commented Jan 11, 2023 at 22:42

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After more research today including talking to the lawyer that drew up the trust, I ended up with two reasons that it might not be good.

  1. listed in the comments above that it would make access to the money more difficult if incapacitated

  2. having the account registered in a persons name makes it easier for an unscrupulous person to declare you incompetent to handle your finances by a court appointed judge, whereas an account in the name of a trust would prevent that situation

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    @RonJon, the question was whether there were any problems ("downsides") in naming a trust as a beneficiary. There could be a multitude of "downsides" including "access". There may be other downsides, but that's all that I could come up with. My question didn't ask whether a trust could be a beneficiary.
    – Ian
    Commented Jan 12, 2023 at 14:28
  • For some reason, I read "Is it ok to" as can you, and that blinded me to the other details.
    – RonJohn
    Commented Jan 12, 2023 at 15:08

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