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I keep an emergency fund in a savings account where it is liquid and easy to access. It is a sizable amount, but my bank offers a laughable savings rate. It doesn't even pay enough over a year to require a form 1099-INT, which has a $10 threshold despite the fact that the balance is nearly a year's income. This is pretty standard for local banks, though, so no surprise.

Online savings accounts exist and offer a much more competitive rate. Unfortunately none of these banks will allow the account to be created in the name of a revocable family trust.

Does anyone know why? It shouldn't be that much harder or riskier for the bank to allow this. In fact it would seem that people who go to the trouble of creating a family trust would be more money-conscious, more likely to save, and more likely to carry a high balance.

But why won't these only online banks accept a trust?

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    To open an account in the name of a trust, you generally have additional paperwork and documentation to submit: e.g. a copy of the notarized trust agreement (or parts of it), including amendments, trustees/grantors, whether trustees can act alone or only in agreement, and beneficiary information. These banks may have judged it as not profitable enough to justify creating a whole new process for them.
    – Stan H
    Commented Mar 2, 2023 at 0:31
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    Unfortunately none of these banks will allow the account to be created in the name of a revocable family trust - really? None? I doubt it.
    – littleadv
    Commented Mar 2, 2023 at 0:31
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    I would suggest that you consider the sorts of emergencies that your fund is for. Does all of it need to be immediately liquid, as opposed to available in a month?
    – DJClayworth
    Commented Mar 2, 2023 at 17:02
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    Moreover, you won’t need E Fund money tomorrow, even if you lose your job, your dog dies, wife leaves, house burns down and truck gets stolen all on the same day.
    – RonJohn
    Commented Mar 3, 2023 at 22:20
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    @DJClayworth or even a week…
    – RonJohn
    Commented Mar 3, 2023 at 23:22

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I think the answer is that the profit margins on those online accounts are very slim, so they limit customers to the easiest to service.

The suggestion to open an online brokerage account is good. Vanguard's money market accounts currently pay about 4.5% and are about as liquid as a bank account. If you want you can write checks on them.

Another thought is Treasury Direct, which allows trust accounts. I have an account there with a ladder of 4 week T-bills, which isn't quite as liquid as a bank account, but pretty close, I can get 1/4 of my money out with no more than a week's notice and all of it in a month. 4 week bills currently pay 4.6%, 17 or 26 week bills over 5%, and are exempt from state income tax.

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But why won't these only online banks accept a trust?

They will. I know for a fact because my trust has such an account. Call their customer service and ask for instructions on how to open it. Usually you'll need to send a trust certificate (probably notarized) as part of the opening documents package.

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  • Hmm. I just tried three well-known banks, and all said they don't. Is there a bank in particular that you know of that DOES?
    – nuggethead
    Commented Mar 2, 2023 at 0:52
  • I'm assuming you're in the US? I have a trust account with Ally, I know ETrade and Fidelity are also fine with trusts.
    – littleadv
    Commented Mar 2, 2023 at 1:01
  • Yes, US. I'll check those out. And they offer straight FDIC savings, not just investments?
    – nuggethead
    Commented Mar 2, 2023 at 1:09
  • Yes, it's a regular bank account
    – littleadv
    Commented Mar 2, 2023 at 1:11
  • @nuggethead - I have trust accounts at Interactive Brokers, Ameritrade, Barclays Bank, and Synchrony. I've had them at Vanguard and a number of other money market accounts. Some other money market accounts will only allow the beneficiary to be the trust, not trust titling. And a number of online money market accounts don't allow trust accounts at all.
    – Bob Baerker
    Commented Mar 2, 2023 at 3:14

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