Big Banks Don't Like You and Don't Like Estate Planning

Banks Want Your Money But They Don’t Want You

I’ve noticed banks have become more difficult to work with, especially since Covid. They want your money, but they don’t want to see you.

A few weeks ago, I drove to the local branch of my national bank to take out cash, not from the ATM. It was 3:50 pm on a Friday, I had not checked the bank’s hours of operation, I was relying on my legacy knowledge that banks are open until 6pm on Fridays. Wrong. As I reached for the door to enter the bank, a clerk opened the door from the inside to tell me the bank was closed. She said they close at 4pm on Fridays. Sure enough, the hours are posted on the door and it says open Friday 10-4. My bad, I didn’t check ahead.

Last month, I tried to open two new business accounts for the law firm. By the way, the bank referenced above and the one I will reference here is a long-standing mega bank, not a local or regional bank, and not a credit union. You can no longer walk into a local branch and take care of business. The local branch usually has three staff. One is the hostess, who greets you and tells you that the teller, of which there is only one, can only handle deposits and maybe write a cashier’s check. Anything else must be done by the banker sitting in the side office. But you can’t meet with the banker in the side office unless you make an appointment online. Even though the banker in the side office is currently not meeting with anyone, you still can’t meet with him. Please come back later after you’ve made an appointment online. But can’t the hostess guy help me? Nope. His job is to tell me the banker can’t meet with me now. The teller is busy taking deposits from the cash-only small business owners, and the banker and the hostess guy are busy doing nothing but smiling at each other as they turn away a customer who was stupid enough not to have made an appointment.

Ok, fine. I’ll play their game. After all, I need to open new accounts, and that is my bank. I go online and make an appointment for the following week, because of course there are no open slots the rest of the week. When I arrive for the scheduled meeting, the hostess guy greets me with a sardonic smile, not unlike the concierge who greeted Kevin at the Plaza in Home Alone 2.

The hostess guy confirms my appointment and ushers me into the banker’s office. The banker looks up from his computer screen, furrows his brow, reluctantly acknowledges me, and then turns on the charm and asks how can he help. I tell him I need to set up two new business checking accounts to link to my existing business account. He looks at me helplessly and says only the business specialist banker can help me and the business specialist banker is not in this branch today. But, I said, when I made this appointment online I had to state the reason on the signup form, and I indicated it was to set up new business accounts. I’m sorry he said, the business specialist banker is only in this branch once a week, and unfortunately, that day is not today. You should try another branch.

I’ll end the story there without detailing how that conversation ended. Let’s just say I decided to find a new bank.

Banks and Estate Planning

Banks intersect estate planning in two ways.

First, we recommend that our clients transfer the title of their large bank accounts, especially savings and money market accounts, to their living trust to avoid probate. The probate threshold in California is $184,500. If the total value of your bank accounts and investments accounts which are not titled in your living trust is more than $184,500, the accounts will be subject to California probate. The solution is to transfer the title of your accounts from your name to your living trust.

This should be simple. Schedule a meeting with your banker (yep, that guy again), bring a copy of your living trust, and tell him you want to transfer the title of your accounts to your living trust. The problem is that many of the bankers have not been trained to do this simple task. The tax identification number of your living trust is your social security number, just like it is for your bank account, so you should be able to change the name on the account to your living trust - no change in the tax identification number. However, many banks make you create a new “trust account”, in which case, you must move your funds from your old account to your new trust account, and reset your auto bill pay and any other online features from your original account.

That’s more work than it should be, but if your bank lets you do it, you are blessed. You should title your accounts in your living trust because by doing so, the accounts will avoid probate. In addition, your living trust includes a mechanism for your successor trustee to manage your account if you become incapacitated or pass away.

However, sometimes, the banker has no idea how to transfer the title of your accounts to your living trust, but he won’t disclose his ignorance. Instead, he will insist you fill out forms and, of course, tell you to schedule an appointment with a senior banker, who is the only banker authorized to handle trust accounts, and, yes, you guessed it, the senior banker is not in this branch today.

The second way banks intersect estate planning is with durable powers of attorney. A durable power of attorney is an essential estate planning document. It authorizes your spouse, child, or friend to handle your finances and manage your assets if you become incapacitated. Here is the situation we often see. An elderly parent has authorized her daughter to act as her agent in her durable power of attorney. The mother and daughter meet the banker and explain that the mother would like her daughter to have access to her bank accounts to help the mother pay her bills. More often than not, the bank will push back and not accept the durable power of attorney. But under California law, it must accept a valid durable power of attorney. The bank ultimately will accept it, but first, it will put up many obstacles in the guise of bank protocol and regulations because most banks do not like durable powers of attorney. Sometimes our clients ask one of our attorneys to call the banker and educate him that unless he accepts the durable power of attorney, the bank could be liable for damages.

Working with a bank should not be this difficult. But it is.

How to Manage Banks

If you know banks will be difficult to work with, what’s the workaround strategy? After all, you can’t leave your cash in your mattress. With big national banks, you have no leverage. They seemingly don’t care, But you can take matters into your own hands.

1. Lower your expectations. Know that banks are difficult and minimize your need to interact with your banker. Title your savings and money market accounts in the name of your living trust and try never to go into the local branch again.

2. Use a local bank or credit union. Smaller local banks tend to be motivated to cultivate relationships with their customers and that can result in better service.

3. If you have a financial advisor, ask if you can set up bank accounts with him. Many financial institutions provide banking services. And your financial advisor will be motivated to make sure you are well served.

4. If you need your daughter to help you pay your bills, add her to your account, rather than trying to use your durable power of attorney. If she is a co-owner of your account, the bank can’t object to her accessing your account. But you may want to disclose to your other children that you have given her access to your account. You want to make it easy for her to help you without creating resentment among your other children.

5. Fintech/online bank for your business. I am moving my business accounts to a fintech, online business bank. I have been amazed at how easy and effective it is - like using a new iPhone v. a rotary dial phone. The fintech banks seem to be well-designed for businesses.

Like everything in life, if you are realistic about the problems, you can work around them. Banks serve a necessary function in our world. Most banks are a pain to work with because it’s not their mission to make your life easy and help you with your estate planning. But if you know this, you can consider your options, of which there are more than ever, and take steps to circumvent the obstacles that many banks present.