LAWGURU 11:56 AM 4/10/2014
RE: Opening a bank account for the maintenance of a building placed with Chicago Title & Trust.
My siblings and I inherited an apartment building in Chicago when our father died. The property is now under a land trust, with one of the siblings as administrator, but we each share equal interest. Right now, only members of our family (immediate and extended) live in the building. The building needs a lot of maintenance and upgrades, not to mention the monthly utility expenses, and we are sharing financial responsibility. The problem is that the money we are pooling and using to pay bills is going into the bank account that is owned by the administrator. The checks that were deposited were indicated as "rent", although we are not really "renting" the property out. We are worried that somewhere along the line, the administrator will suffer tax consequences if it appears she is getting rental income (or any income) that she really is not. It was also a problem when we individually needed to apply for personal governmental aid, but because no one actually owns the property of record, we don't know whether to say we are renting or owning the property on the government applications.
QUESTION: How can we open a plain old checking account to create a fund for the building itself, without it subsequently appearing to be income to the administrator? Would it be similar to the way some families create accounts for their family reunions or family scholarship funds? We need to be able to deposit and withdraw funds on a regular basis, complete with an associated debit card. We have approached a couple of banks but we can't seem to get an answer (that we understand).
Can we set it up as a non-governmental organization, and get an FEIN for it?
Can we give the account any name, i.e. Smith Family Maintenance Fund?
Thank you for your assistance and (unofficial) advice!
1 Answer from Attorneys
To open a bank account, you will need SSNs or an FEIN. Check with your bank to see what they advise. It is important that you decide among yourselves who can write checks. It is not correct to say that no one owns the property. The trustee has nominal title to the property, but the property is owned by the parties named in the trust instrument as beneficiaries.
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