The bank says I have to register my trust into public record. What do I do?
Answer:
When opening a trust checking account, some clients have been told by their banks, “Your trust needs to be registered with [some government organization].”
This may be a bank policy, but it is not law. It is also a very uncommon bank policy. Many bankers are more familiar with publicly filed entities such as corporations and LLCs. These entities are created through a state's Secretary of State office or Department of Corporations. Corporations and LLCs are brought into existence upon the filing of a public record (e.g. Articles of Incorporation or Articles of Organization). Opening a bank account for an LLC or corporation usually involves supplying the bank with this publicly filed document.
A trust, on the other hand, is a private instrument that is brought into existence by the involved parties signing the trust agreement. The trust agreement does not need to be filed with any government office or made into a public record for any reason. Trusts are not state-granted privileges, but instruments granted by common law. Bank officers may not be educated or trained to understand the differences between a trust and a corporation.
Your plan and trust are registered within our document system in order to be covered by our IRS determination letter that states you have a qualified plan.
Making your trust public record is not legally required and provides no benefit. It is something to be avoided. If a bank asks you to register your trust into any public record, you may want to tell them, “A trust is a private instrument. I am not willing to give up my privacy rights, and I believe your request for me to do so is unreasonable. Please open my account without asking me to sacrifice privacy.”
If the bank doesn't waive the request, I would encourage you to do business with another bank who respects your interests. Finding a bank that doesn't have this requirement should be very easy.
