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Trust Accounts

When it comes to trust accounts, there's everything from simple to complex, depending on your needs. At Tidemark Federal Credit Union, we're proud to help families in Delaware, Maryland and beyond with trust accounts structured to benefit you, your family and beneficiaries.

We Provide Guidance For All Types Of Trusts

If you need to create a trust account for any reason, our friendly team will explain the details and help match you with the ideal solution. There's plenty to consider when it comes to different structures and tax implications, and we'll make sure you're well-informed.

Totten Trust

A Totten Trust is known as payable-on-death type of account, which expresses the owner’s intent to transfer funds to named beneficiaries at the time of the owner’s death. Unlike more complicated trusts, Totten or payable-on-death trusts can be created at the credit union simply by indicating that intent in the title of the account.

A testamentary account in which the named beneficiary is the spouse, child, or grandchild of the owner, is "insured up to $250,000 in the aggregate as to each such beneficiary, separately from any other accounts of the owner or beneficiary, regardless of the membership status of the beneficiary." If the named beneficiary is not the owner's spouse, child, or grandchild, then the funds in the account "shall be added to any individual accounts of such owner and insured by $250,000 in the aggregate."

Fundraising Trust

Many people raise funds to defray medical costs for family and friends, to address educational expenses for an orphaned child, and additional purposes. It's important for the recipient and giver to understand the tax consequences of fundraising.


These nonprofit organizations accept contributions from individuals or corporations for the benefit of a cause‚ such as medical research for a specific illness‚ help for a specific region‚ or other things. Contributions are tax-deductible to the donors. Unfortunately‚ to be approved for nonprofit status by the IRS‚ which allows a foundation to accept tax-deductible contributions‚ the foundation can’t be set up for the benefit of individual people. To go the foundation route‚ funds would have to be directed toward a broader purpose‚ such as medical research for a disease or donations to a medical facility.

Forming a foundation involves obtaining nonprofit status — also known as 501(c)(3) status — from the IRS‚ filing annual reports with the state and‚ depending on the level of donation‚ filing a tax return with the IRS. A foundation needs to be incorporated with a governing board and bylaws.

Alternatives To Foundations

Individuals can establish a fund in their loved one’s name, which is as simple as opening a savings account or a trust fund designated for their benefit.

Unlike a foundation‚ a fund doesn’t provide a tax break for the donors, but donations are considered gifts and are not taxable income to the beneficiary. For the donor‚the gift will trigger gift-tax rules if it exceeds a certain level. The recipient will not need to report this on their return as long as it is considered a true gift and not any type of payment. If the gift produces income such as interest or dividends‚ the recipient will need to pay tax on the income earned.

We recommend opening a simple trust account with an appropriate name for your specific purpose. This way‚ donors will be assured that their donations are going into an account for the benefit of the recipient and that the trustee is required to act in the recipient’s best interest. Keep in mind, earnings on the account are taxable to the recipient.

Medicaid-Related Trust Accounts

This trust account can be used by qualified applicants to save for long-term nursing care for people with physical and mental disabilities. Based on the federal program's guidelines, there's a limit to the assets that applicants can own and still qualify.

Miller Trust

This irrevocable trust can be used to qualify a Medicaid applicant with income that exceeds the eligibility limits. The Miller Trust is applicable in states that impose an income cap on Medicaid long-term care eligibility, which is about half the states. Also known as an Income Cap Trust, Qualified Income Trust or Income Assignment Trust, this trust can be named as recipient of an applicant's income from a pension plan, Social Security or other sources. When the beneficiary passes, the state Medicaid agency is reimbursed for medical assistance from any remaining trust assets.

Disabled Individual's Special Needs Trust

Individuals who are younger than 65 and disabled under the Social Security definition can use this trust for their benefit, and it must be created by a parent, grandparent, guardian or court order. This trust often is created by a court on behalf of a disabled person as part of a personal injury lawsuit. When the beneficiary passes, the state Medicaid agency is reimbursed for medical assistance that was provided during the individual's lifetime.

Living Trust

Living trusts are created by attorneys or by the individual grantor/trustor, and legal documentation (the trust instrument) must exist to establish a living trust.

Blocked Trust

If a minor or adult becomes a beneficiary of a settlement through insurance or court order, a financial institution can establish a blocked trust or blocked account. If there is a court order involved, the financial institution would be named as the recipient of the funds. The order will also describe how the account should be established, who can be on the account, whether any transactions can be made on the account, etc. Some court orders do not permit the release of funds for any reason without another court order. Some will direct the financial institution to pay a specified person out of the account after a certain date. Tidemark Federal Credit Union does not offer these accounts at this time.