Q: I've gotten into trouble with creditors because I've been unemployed for some time now. I manage a New York State trust for my daughter, which was set up by my parents. It is registered using my Social Security number. Can my creditors invade or freeze this account? -- FW via email
A: No. Your creditors have no legal claim on this money because it doesn't belong to you.
As the trustee, you're responsible for managing the account and distributing its assets to your daughter according to your parents' instructions, but you don't own it. You should take two steps to make this clear.
First, the title on the trust account should reflect its actual ownership. If your daughter's name is Charlotte, for example, and your name is Frances, the title of the trust account should be something like 'Charlotte Smith Trust, Frances Smith trustee.' Ask the bank, brokerage, or mutual fund company where the account is set up to use the appropriate language; every institution has its own wording.
Second, the trust account shouldn't carry your Social Security number. That's going to confuse the Internal Revenue Service, as well as your creditors, because any income earned in the trust account that's reported to the IRS under your Social Security number will be reported as income to you.
A trust is a legal entity, and should have its own federal tax ID number. You can apply for one online. To learn more, go to www.irs.gov and download IRS Publication 1915, 'Understanding Your Individual Taxpayer Identification Number'.
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