trust account experiences

Discussion in 'Retail Brokers' started by starvingtrader, Sep 24, 2012.

  1. Hi,

    I was wondering if anyone has had any bad experiences with either setting up or trading through a trust account.

    1) If I change my individual account to a trust account, could this be done while maintaining my open positions (stock and option trades that I hold for 3-60 days)? or is it best to go into cash for a couple of weeks just for account for paperwork problems?
    2) Anyone have any experience with a trust account through OptionsHouse specifically?
    3) Are there any restrictions on stuff (like margin, shorting, etc) that are common with non-individual accounts?
    4) Does a trust have to pay any special fees (e.g. Professional Subscriber data fees)?
    5) Are there any random problems people have had?

  2. What kind of trust account? An IRA? A 401k? A defined benefit pension plan?

    (1) A trust is a different legal entity so you cannot transfer positions at all.
    (2) No but I think you might consider setting set up your own trust with Millenium or other trustee - then ANY broker will accept the account as a regular account.
    (3) You cannot borrow (including stock margin) in a tax-exempt entity unless you pay UBIT tax. Futures are ok *if* authorized by the terms of the trust (the trustee may balk).
    (4) Some brokers, like IB and others, do not require you to pay professional fees if you are the sole beneficiary.
    (5) I have opened a number of trust accounts for my company's pension plans. In this case, I am the trustee. I do use an IRS approved prototype plan and a pension advisor.

    Oh do not personally guarantee the account to avoid possible disqualification for a "prohibited transaction". Some brokers ask for this. You have to be very knowledgeable about the law to open an account to be able to quote IRS code sections etc. to argue/satisfy them or even fill in the application forms.

    In your case you probably will use Millenium or Equity Trust etc. and they will look after the details and charge you large fees for that! Also you will have a 3 way negotiation between you, the trustee, and the broker which may be time-consuming and troublesome - the trustee may not allow you to do certain types of trades etc.

    You need to get familiar with the legal basics of trusts and tax before doing anything. Otherwise you will not understand what you are doing. It is not something you can casually "buy".
  3. It would be a living trust, with only myself as the trustee and one beneficiary.
  4. Ah ok - a lot of what I said would not apply then.

    Apparently a living trust is basically disregarded for tax purposes and everything is kept under your own SSN during your lifetime.

    I do not know enough about living trusts to say much - hopefully someone else will.

    I am skeptical of them though except for the very wealthy.

    Probate is usually not the problem it is made out to be.


    They are sometimes promoted by scam artists, or by financial planners as one more way to charge large fees.

    Since it is not tax-advantaged, I think you would be able to do any sort of trading if you do set one up. Try asking your current broker.
  5. ok, thanks for your replies
  6. My guess is that any broker will accept the account.

    They all have Trust applications on their web site. Their should be no additional fees - I do not pay any even for my pension plan trust accounts, which are more complex legally.
  7. Try a more accurate thread title I.E. How to Set up Living Trust Account?

    It may get the attention of Robert Green, probably only persons advice on ET I would trust regarding taxes.

    Always best to seek professional advice than trust your tax planning to a message board

  8. The thread title was accurate. I am not looking for advice on how to set up an account. I know how to do so.

    My question had nothing to do with taxes in any way.

    I wasn't trusting anything to a message board. I was simply soliciting people's experiences.
    My question had nothing to do with taxes in any way.
  9. 1. Generally you will need to fund the trust account as a new account at opening with cash, positions cannot be transferred. Unlike switching a bank account title where they just switch the ownership.
    2. no but i have opened trust accounts with IB, Advantage and RJO
    3. none, however all activities need to be spelled out in the trust
    4. no, you are still retail
    5. well it's likely that if there are problems they would occur when your successor trustee has to step in and take control, havent been in that situation yet thank god. :)
  10. clerk


    Working at an introducing broker-dealer, I have opened many trust accounts at many custodial brokers with no issues. Just have the right supporting documentation (pages from trust agreement/declaration stating the name of the trust, the settlors, and the trustees; the page stating the date of the trust, and the execution/signature pages) and account paperwork (brokerage firm proprietary Trustee Certification of Investment Powers, duly executed by all presently-serving trustees).
    #10     Oct 10, 2012