Almost any FDIC-insured bank or NCUA-insured credit union can open a fiduciary account, so the more useful question is which type of institution fits the job. Banks that offer fiduciary accounts fall into three tiers: commercial banks and credit unions that provide the account and little else, trust companies that act as professional fiduciaries and take on the administration themselves, and brokerage or wealth management firms that specialize in investing fiduciary assets. A straightforward estate with cash and a house can be settled through a checking account at a neighborhood bank. A multimillion-dollar irrevocable trust holding a family business is not something a retail branch is equipped to handle.
Commercial Banks and Credit Unions
Any FDIC-insured bank or NCUA-insured credit union can open a fiduciary checking or savings account. These accounts work well for standard estate administration, simple trusts, and guardianship accounts that mostly hold cash. The institution provides the account and the usual transaction services. Everything else stays with you: tax filings, court accountings, investment decisions, legal compliance.
Because the bank’s role is limited, so are the fees. You generally pay normal account maintenance charges and nothing more, which makes this the cheapest option by a wide margin. That saving comes with a real trade-off. Branch staff at a local bank may not deal with fiduciary titling often, and the paperwork can trip them up. Arrive with your documents organized and originals ready, and expect at least one follow-up visit before the account is fully open.
A commercial account is usually the right answer when the assets are simple, the timeline is short, and you are comfortable running the administration yourself.
Trust Companies
Trust companies exist specifically to act as professional fiduciaries. Rather than handing you an account to manage, the trust company itself serves as trustee or executor and takes on legal responsibility for managing the assets, filing tax returns, distributing income to beneficiaries, and keeping the books. It is a fundamentally different service from a bank that simply holds money in an account you control.
That comprehensive service is priced accordingly. Trust companies typically charge an annual fee calculated as a percentage of assets under management, often in the range of 1% to 2% per year, sometimes with additional charges on income the trust earns. The math starts to make sense when the assets are complicated enough that professional management genuinely reduces the risk of a fiduciary breach. Private business interests, commercial real estate, and concentrated stock positions are the usual candidates. So is a trust designed to run for decades, where the person who set it up cannot count on a single individual trustee being available the whole time.
Brokerage and Wealth Management Firms
Brokerage firms focus on the investment side. Their custodial accounts are built to hold and trade securities on behalf of trusts and estates, and their expertise is portfolio construction, tax-efficient investing, and compliance with prudent investor standards. The Uniform Prudent Investor Act, adopted in some form by nearly every state, requires trustees to evaluate investments as part of an overall portfolio strategy, weighing risk tolerance, beneficiary needs, inflation, and liquidity.
Investment accounts usually need a linked bank account for cash transactions such as paying estate expenses or distributing income. In practice, you often end up with both a brokerage account and a bank account for the same trust or estate. The brokerage handles investment reporting; you or a trust company handle the broader legal administration.
Choosing Among Them
Three factors decide which type of institution fits:
- Complexity of the assets. Cash and a home fit at a bank. Marketable securities push you toward a brokerage. Illiquid, income-producing, or hard-to-value assets belong at a trust company.
- Duration of the arrangement. An estate that closes within a year is different from a trust that will run for a generation or a conservatorship that may last decades. Longer arrangements benefit from institutional continuity.
- Cost tolerance versus administrative burden. A retail bank account is cheap but leaves the work on you. A trust company charges a percentage of assets and does the work. Brokerages sit in between, handling investments but not the fiduciary role itself.
These are not exclusive choices. Many fiduciaries pair a bank checking account for day-to-day cash flow with a brokerage account for invested assets, and bring in a trust company or attorney only for specific problems.
What You Need to Open the Account
Wherever you go, the institution will not open a fiduciary account until it verifies that you have legal authority to control someone else’s money. Expect at least one in-person branch visit with original or certified documents.
Proof of Legal Authority
The document depends on the role:
- Executor or administrator: Letters Testamentary or Letters of Administration issued by the probate court. Banks want the original or a recently certified copy, and many reject documents older than 60 days.
- Trustee: a copy of the trust agreement or, more commonly, a Certificate of Trust that summarizes the key details without revealing private distribution terms.
- Guardian or conservator: the court order appointing you and specifying your financial authority over the protected person’s assets.1Consumer Financial Protection Bureau. Managing Someone Else’s Money – Help for Court-Appointed Guardians of Property and Conservators
- Representative payee: the Social Security Administration’s own appointment letter confirming your designation.
Personal Identification
You will need a government-issued photo ID, and the bank will collect your Social Security Number or Individual Taxpayer Identification Number to satisfy federal customer identification requirements.2Federal Financial Institutions Examination Council. FFIEC BSA/AML Examination Manual – Customer Identification Program That identifies you as the person controlling the account. It is not the tax ID that goes on the account itself.
The Entity’s Tax ID Number
The account is titled under the estate, trust, or guardianship rather than under your personal name, and it needs its own tax identification number. Most estates and irrevocable trusts need an Employer Identification Number from the IRS.3Internal Revenue Service. Instructions for Form SS-4 You can get one free through the IRS online application, which issues the number immediately on approval.4Internal Revenue Service. Get an Employer Identification Number You are limited to one EIN application per responsible party per day.
The exception is a revocable living trust while the grantor is alive. The IRS treats the trust and the grantor as the same taxpayer during that period, so the account uses the grantor’s Social Security Number.5Internal Revenue Service. Understanding Your EIN Once the grantor dies, the trust becomes irrevocable and needs its own EIN.
Account Titling
The title has to reflect the legal arrangement, not just your name. An estate account should read something like “Estate of [Decedent Name], [Your Name] as Executor.” A trust account should include the trust name and your capacity as trustee. Using only your personal name creates ambiguity about who owns the funds and can jeopardize both deposit insurance and your legal standing if a transaction is later challenged.
FDIC Insurance Depends on the Bank You Choose
Fiduciary accounts qualify for pass-through deposit insurance, which means the FDIC looks through the account to the actual owners of the money rather than insuring the account in the fiduciary’s name. Three conditions have to be met: the funds must genuinely belong to the beneficiaries, the account title must indicate it is held in a fiduciary capacity, and the records must identify the beneficiaries and their ownership interests.6FDIC. Pass-through Deposit Insurance Coverage
For trust accounts, each trust owner gets $250,000 in coverage per unique beneficiary, up to a maximum of $1,250,000 for trusts with five or more beneficiaries.7FDIC. Your Insured Deposits That cap took effect in April 2024 and applies no matter how many beneficiaries are named beyond five. For a large estate or trust with substantial cash, staying fully covered may mean spreading deposits across multiple FDIC-insured banks. This is a practical reason to think about which banks you use, not just what type.
If the account is not properly titled or the records do not identify the beneficiaries, the FDIC insures the deposits as belonging to the fiduciary personally and aggregates them with any other accounts the fiduciary holds at the same bank.6FDIC. Pass-through Deposit Insurance Coverage Large portions of the funds can end up uninsured as a result.
Representative Payee Accounts Are Different
If you are managing Social Security benefits for someone who cannot manage them independently, the Social Security Administration requires you to be formally designated as a representative payee. A power of attorney is not sufficient. Any benefits you do not spend on the beneficiary’s current needs must go into an insured savings account or U.S. Savings Bonds. For children receiving large retroactive SSI payments covering more than six months of benefits, those funds must go into a completely separate dedicated account and can only be spent on disability-related expenses.8Social Security Administration. A Guide for Representative Payees Most banks will open one of these accounts, but the rules about what type of account is acceptable come from SSA, not the bank.
A Working Approach
For a typical estate or a straightforward trust, start with the bank you already use. Call ahead, ask specifically for someone who handles estate or trust accounts, and confirm the exact documents they want before you make the trip. If the assets include an investment portfolio, open a separate brokerage custodial account and link it to the bank account for cash flow. If the trust holds a private business, illiquid real estate, or is meant to run for decades, price out a trust company and weigh the annual fee against the risk and workload of doing it yourself. The right institution is the one whose services match the complexity of what you are managing, not the one whose branch is closest.