Fidelity Trust vs. Estate Account – My Story

I’ve been trying to figure out the difference between a Fidelity Trust account and an Estate brokerage account.

Even after chatting with a Fidelity rep, things still seemed a bit unclear.

So, let me share my own experiences to help you get a handle on this financial puzzle.

Fidelity Trust Account: What Is It?

A trust account isn’t just a place to stash money. It’s a legal entity with its own tax identification. 

In my experience, it’s established and managed by either a trustee (in the case of an irrevocable trust) or the beneficiary (for a revocable trust).

When I decided to set one up, I got a lawyer involved. They helped lay the legal groundwork, and only then could I open the trust account.

The Role of Estate Account

When someone we care about passes away, an estate account steps in. This account serves as a repository for the deceased individual’s assets, overseen by an appointed Executor.

The “Executor” manages the distributions per the person’s last will and testament.

Insights from My Journey

Through this process, I learned that if it’s a testamentary trust, it essentially doesn’t exist yet. Thus, the beneficiary should be a human, not the trust itself.

I’ve adopted the Transfer on Death (TOD) approach, reserving the trust for when it truly takes form.

While it’s possible to establish a trust posthumously, it demands a proactive trustee who can initiate accounts and manage the funds diligently. I’d advocate for setting up the trust account well in advance to streamline the process.