Posted by JanetK_CA on 7/3/13 7:13pm
Msg #475549

Disbursement check payable to trust

I just had an interesting phone call from a borrower I signed recently. Their property remained in their trust and the HUD ended up with a small cash-out amount. Since the vesting was in the name of the trust, the check was issued payable to the name of the trust, which makes sense to me. The problem is that their bank told them that they couldn't simply endorse it to themselves, they had to have an account in the name of the trust to be able to deposit (or cash) the check. [I don't remember how the trust was named, but it usually has both the husband's and wife's names included.]

Has anyone ever heard of anything like that? The title co couldn't help them, so I suggested they might try a different bank or even a different branch, to see if they could get lucky. If that doesn't work, they're going to have to open a separate checking account just to get access to their funds! I don't usually hear about what happens after a signing and I thought this was an interesting situation, something I'd never thought about before. Got me wondering how people usually handle this. I'd be very surprised if most people with a trust have a separate checking account for it - but I could be wrong.

Reply by ananotary on 7/3/13 7:16pm
Msg #475550

That is exactly correct, they need to open an account for

the trust to make a deposit payable to the trust. That is exactly how my personal accounts are. I'm surprised they have never had this issue before or that their attorney didn't advise them of this need. Our attorney let us know from the get go everything we would need to do.

Maybe they created their trust online?

Reply by sueharke on 7/3/13 7:18pm
Msg #475552

Re: That is exactly correct, they need to open an account for

Walmart might cash a check for $3.00, depending on the amount of the check.

Reply by TeriW/CA on 7/3/13 7:22pm
Msg #475554

Re: That is exactly correct, they need to open an account for

ananotary is exactly right. I don't know why attorney's don't tell their clients, or if they do, they just don't remember. All they have to do is add the name of the trust to one of their accounts.

Reply by TeriW/CA on 7/3/13 7:24pm
Msg #475555

Re: That is exactly correct, they need to open an account for

To add to that, the reason is, the trust is it's own entity and anyone can be the trustee of the trust. They bank needs to know who the trustees are. Just because someone's name is in the title of the trust, doesn't necessarily mean they are the trustee, although they usually are.

Reply by Yoli/CA on 7/3/13 7:22pm
Msg #475553

Re: That is exactly correct, they need to open an account for

Ananotary is correct.

Had a signing not long ago with similar scenario you describe, Janet. Difference being, they already an at least 1 account for the Trust. Proceeds were being issued to Trust.

Reply by Shoshana/AZ on 7/3/13 8:13pm
Msg #475564

Not necessarily so.

when we did our reverse mortgage, check was made out to us.

Reply by Shoshana/AZ on 7/3/13 8:13pm
Msg #475565

I should add the the property was in a trust. n/m

Reply by RIcloser on 7/3/13 8:59pm
Msg #475574

Don't know if this only pertains to RI, but title is in the name of the Trustee, not the Trust. We write the check payable to the individual Trustee(s), as Trustee(s) of the specific Trust. Never had an issue. Could it be that all had Trust Accounts? However, I do believe and agree that the Trust should have its separate account.

Reply by GOLDGIRL/CA on 7/3/13 9:30pm
Msg #475577

"The title co couldn't help them"

Huh? The TC made out the check, so they can make out another ... if they wanted to ....IMHO. Additionally, my understanding is that in CA, at least, loan and escrow docs are signed by individuals, not trustees. Even tho the property is in a trust, all financial stuff is signed as an individual, so it would make sense to me that any cash-out would go to individuals. Just like any proceeds due would be coming from a personal checking account or a cashier's check purchased by an individual ... not a trust.

But that's just my little ole POV....

Reply by LKT/CA on 7/3/13 9:55pm
Msg #475584

Re: "The title co couldn't help them"

I've seen docs where borrowers are signing as individuals and trustees. Two borrowers - four signature lines - all typed as:

_______________________________
John Q. Doe

_______________________________
John Q. Doe, Trustee of the John Q. Doe
& Jane E. Doe Family Trust

_______________________________
Jane E. Doe

_______________________________
Jane E. Doe, Trustee of the John Q. Doe
& Jane E. Doe Family Trust

Reply by Sharon Spence on 7/3/13 10:22pm
Msg #475592

Re: "The title co couldn't help them"

You're right, LKT .... some lenders are now funding *in* the trust .... meaning there're not all those in'n'out grant deeds taking signers in'n'out of the trust ... so makes sense title might issue checks to the trustees in those cases.

Reply by desktopfull on 7/4/13 12:01am
Msg #475598

That's why they usually take the property out of trust

to refi and when the disbursements have been made and the docs are recorded for the new mortgage, they put the property back into the trust. It's a lot easier that way.

Reply by Notarysigner on 7/4/13 12:45am
Msg #475599

Re: It can still be deposited

As long as the cash- out amount is less the 2,000.00 they can just deposit it in an ATM. B of A for sure. Sometimes I get checks in Dawson Notary Services, go inside bank, they won't take, tell me I got of have a business account. What? Turn around and go over to the ATM in the bank, and deposit check, accepted.

I asked how could this happen?? THIS IS THE KICKER......Some banks "outsource" their ATM's, a private company manages them. Yikes!

Reply by Pam/NM on 7/5/13 10:28am
Msg #475699

Could they add the Trust as a co-signing on their existing

checking account? I don't know banking regs, but I have a friend who has Jane Smith and also Smith Family Trust written on her checks.