The Listen to Lawrence Letter: Transferring Ownership of a CD to a Trust

COMMENT FROM COURTNEY ABBOTT, ESQ.

Lawrence,

I just wanted to comment on one of your recent LISTEN TO LAWRENCE LETTERS regarding the funding of a trust with a CD.

Clients often tell me their bank treats this as a transfer subject to an early withdrawal penalty. I have tried multiple times to fight it with these banks, but some come back and tell us that regardless of the rules, their “policy” is that any change in account title results in a new account number, and it will be treated as an early withdrawal (for revocable and irrevocable trusts).

MY RESPONSE:

Courtney, who is one of our top attorneys here, is not wrong. Some banks do give us a hard time, even though they are wrong. Remember, we are not breaking the CD, we are simply transferring the ownership to a trust, under the same terms, and often under the same social security number.

We have to handle this on a case-by-case basis, but often the squeaky wheel gets the oil. Complain loudly enough and the bank may go along with your wishes. Do not accept what the first clerk at the bank says, take it up the ladder and you may get a different result…especially if they want you to continue banking with them. Their “policy” is not law. If they do not budge, then either pay the small interest penalty or wait until the CD matures.

And, if anyone you know would like to

receive this Listen to Lawrence Letter just

tell them to send their email address to info@davidowlaw.com and I’ll add them to the list!

As always, please send your questions in! If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected. Stay safe!