Credit card for a trust/trustee?

[wasCB14]

My grandparents left us some rental real estate (what didn't go to aunts and uncles) via two trusts. DM is the trustee, and DM, DSister and I are beneficiaries. DM and I will be sharing the day-to-day management duties.

Are there credit card lenders willing to lend to a fairly small business (technically two businesses) with a fairly complicated ownership structure? Each trust has its own TIN.

One alternative might be that DM could apply for a card as a sole proprietor and just get reimbursed? Properties between the two trusts are worth ~$4M with ~$1M cash so it's not unreasonable to want a $50k or whatever CL. But that might be a stretch based on her personal tax return alone and CL history more in the $25k ballpark.

The financial risk in the business is low. All mortgages are paid off and we have no vacancies. No liabilities other than routine accounts payable. None of the three of us have any objections to making personal guarantees.

While we are new to Wells Fargo, the preceding trusts (before distribution among DM and her siblings) had a healthy relationship there. But the rental business was run on a pretty low-tech manner, using paper checks for everything and never getting a CC. Most of the cash is currently at Chase where my family has long personal familiarity but no prior business relationship.

I'm attracted to the idea of getting a BofA business relationship. Reaching $100k in cash or liquid assets would not be a problem, but it would make things probably too complicated for DM.

I love the Amex expense tracking tools on my BBP, but I already use that for a different business (and some personal spend). We definitely want a V/MC for broader acceptance.

Card/bank suggestions? General thoughts?

[Anonymous]

I'd suggest speaking with your relationship manager at the financial institution the Trusts' funds are kept to get their recommendation. They can also help push the process along if you decide to apply since they'd be familiar with the situation/structure. At it's root, it'd just be handled like any other small business card.. but your comment about it being managed in a "low-tech" manner suggests that credit history under those TINs may be limited, making it harder to apply elsewhere.

[wasCB14]

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@Anonymous wrote:

I'd suggest speaking with your relationship manager at the financial institution the Trusts' funds are kept to get their recommendation. They can also help push the process along if you decide to apply since they'd be familiar with the situation/structure. At it's root, it'd just be handled like any other small business card.. but your comment about it being managed in a "low-tech" manner suggests that credit history under those TINs may be limited, making it harder to apply elsewhere.

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True. No credit history at all under the new TINs. All mortgages were paid off before the assets were distributed.

I suppose that even if Wells has an underwhelming product lineup, it may be the best place to start for the trusts themselves to build a credit history.

We're more likely to sell properties than buy more, though. So part of me questions whether the trust even needs credit of its own if the "reimbursed trustee" thing works. But if a $30k major renovation comes along and there's no discount for paying by check, it would be nice to get some points.

[Liberty33]

Yes one can get credit of all kinds for a trust. I have an EIDL for my trust too.  

One can legally use a 508c1A trust which is tax exempt (income and property tax exempt) and reporting exempt for life once an EIN is gotten too.  

I have many many tradelines for my trust in Florida should you want to look it up on Experian - <mod edit - please don't post personally identifying info on the forums.  --UB>

There are only two lenders I can find that don't issue credit to a trust - Bank of America and Wells Fargo. 

Everyone else I have tried issues credit to trusts - Chase, Amex, Syncrony, Citi, Schwab, TD Ameritrade, All net 30 and the like accounts, etc.  

[wasCB14]

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@Liberty33 wrote:

Yes one can get credit of all kinds for a trust. I have an EIDL for my trust too.  

One can legally use a 508c1A trust which is tax exempt (income and property tax exempt) and reporting exempt for life once an EIN is gotten too.  

I have many many tradelines for my trust in Florida should you want to look it up on Experian - <mod edit - please don't post personally identifying info on the forums.  --UB>.

There are only two lenders I can find that don't issue credit to a trust - Bank of America and Wells Fargo. 

Everyone else I have tried issues credit to trusts - Chase, Amex, Syncrony, Citi, Schwab, TD Ameritrade, All net 30 and the like accounts, etc.  

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Our rents are so low that, economically speaking, we sort of are running a charitable organization! But that's just the result of a lazy relative not raising them for many years along with CA rent control laws (which limit increases). If we had a lot of debt we'd be in deep trouble.

We do get some benefit from Proposition 13 (low property taxes) and GST estate planning. No appetite to cross from well-established legal tax planning to...more questionable approaches. I didn't realize religious organizations were exempt from rental UBIT though.

Good to know about WF and BofA not lending to trusts. WF has been a bit of a hassle already. DM could log in but not view the accounts online, and WF instantly rejected a mobile check deposit that was within the allowed dollar cap. The only reason to use BofA would be Preferred Rewards on the CC side. So we may take an "everything with Chase" approach (and Schwab or Fidelity for investments).

DM may get an Ink Cash (5% categories) for one trust and an Ink Unlimited (1.5%) for the other. It's not so much for rewards efficiency, but rather just to have an easy way to tell the cards apart. Any problems getting both cards the same day? DM is ~0/24.

IIRC, Chase does not report business cards personally. I am 5/24. Am I right in thinking that Chase will allow her to add me as an AU and that I won't become 7/24?

[Liberty33]

Our rents are so low that, economically speaking, we sort of are running a charitable organization! But that's just the result of a lazy relative not raising them for many years along with CA rent control laws (which limit increases). If we had a lot of debt we'd be in deep trouble.

One doesn't need to run a charity to have a tax free and reporting free entity.  One only needs to know how to set it up properly.  

We do get some benefit from Proposition 13 (low property taxes) and GST estate planning. No appetite to cross from well-established legal tax planning to...more questionable approaches. I didn't realize religious organizations were exempt from rental UBIT though.

Using a 501c3 exemption to taxes isn't illegal. 

Read #3 from the SBA guidance via this link:

https://www.sba.gov/sites/default/files/2020-04/SBA%20Faith-Based%20FAQ%20Final.pdf

Using a 508c1A exception to applying for the exemption isn't illegal either.  Any business qualifies as a "convention" which is an agreement between two parties (not two persons) which are the grantor and trustee in a trust.  Sounds like you just need a better accountant or learn this information and never need an accountant ever again.  

Good to know about WF and BofA not lending to trusts. WF has been a bit of a hassle already. DM could log in but not view the accounts online, and WF instantly rejected a mobile check deposit that was within the allowed dollar cap. The only reason to use BofA would be Preferred Rewards on the CC side. So we may take an "everything with Chase" approach (and Schwab or Fidelity for investments).

Chase has the best credit products and I go with them too as my main use cards but Amex is a good second for use at times.  

DM may get an Ink Cash (5% categories) for one trust and an Ink Unlimited (1.5%) for the other. It's not so much for rewards efficiency, but rather just to have an easy way to tell the cards apart. Any problems getting both cards the same day? DM is ~0/24.

I have both cards for my trust but didn't get them the same day.  I waited 60 plus days just to make sure it worked out.  

IIRC, Chase does not report business cards personally. I am 5/24. Am I right in thinking that Chase will allow her to add me as an AU and that I won't become 7/24?

You will have to try and see as this policy aspect changes from time to time.  

[wasCB14]

We used one of the ten largest accounting firms in the US for the estate return and "new trust" creation. Day-to-day bookkeeping and tax returns we'll handle ourselves. I am an Enrolled Agent (admittedly one of limited experience regarding aggressive tax positions) and following my father's death years ago DM and I got a lot of experience preparing and filing trust income tax returns.

I'm not totally clear on your argument, but it sound like you're reading 508c1A as

("conventions" or "association of churches")

whereas I read it as

("conventions or associations" of churches)

If you really believe the former interpretation is correct...and that you don't need to have a church to be exempt, only a grantor and a trust as parties...then why isn't the strategy more popular? And why use a religious name for what is not a religious organization, if you're not trying to pose as one and stay under the radar? Or do you actually operate a church, conforming to the general guidelines provided by the IRS? https://www.irs.gov/charities-non-profits/churches-religious-organizations/churches-defined

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General update:

DM applied online for an Ink Unlimited using the TIN for one of the trusts. Instant decline.

We called for an appointment and met with the branch CPC contact, whom DM had met with previously.

He told us that because the trust wasn't an LLC/Partnership/Proprietorship/Corporation that we were ineligible for their business cards...even though we were operating a business that had a legal existence separate from the owners/beneficiaries. Then he talked about how wonderful CPC was, without really getting into specifics.

He told us to apply for personal credit cards and to use them for trust business. Then he talked about how wonderful CPC customer service was. Hoping it would help him see us as attractive customers, I told him I knew it was good, having formerly been in their JPM Private Client Direct group of customers via Bear Stearns. He was clearly unfamiliar with it (he only knew about JPM Private Bank), but I think he got the idea I wasn't going to be easily seduced by the idea of CPC.

Eventually our lack of acceptance of resorting to personal credit cards got him to call the recon line. Recon denied us for being too new. He said we should maybe reapply in a few years when we had more history.

I got a little agitated at that point. I told him that while the trusts were a new legal entity, we had no debt, no vacancies, and as he could see in front of him we had a lot of cash already on deposit. I said I was hoping we could build a credit history for the trusts with Chase in case we wanted to get a real estate purchase line of credit in the future.

That seemed to help things a little. He called recon again and they asked for some paperwork that we had already given to Chase when setting the trust accounts up. We gave it to them (again) and the application is currently back to "pending" as they review it.

One thing that really irritated me was that in praising CPC, he said it would be great for refinancing the mortgage currently on our commercial property. Of course, this showed:

A: He wasn't listening when I said we had no debt. No debt means no existing commercial mortgage to refinance.

B: The fact he had already said he couldn't lend to the trusts didn't stop his natural sales pitch.

I still feel a bit agitated and I know this may not all be clear. But in summary, my interaction with CPC would suggest a new slogan:

"We promise solutions to your future complex problems while ignoring the only slightly complex ones you're facing today (which we don't understand, anyway)!"

[Anonymous]

Try Divvy or Comdata Corporate Card. There also Amex for startups.

[wasCB14]

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@Anonymous wrote:

Try Divvy or Comdata Corporate Card. There also Amex for startups.

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Amex is possibly the next stop. DM had a Costco Amex in good standing for many years (until Citi took the account over with the switch to Visa) and has had a BCE for about five years. The main obstacle is limited merchant acceptance for some recurring expenses.

[Liberty33]

Re: Credit card for a trust/trustee?

 

We used one of the ten largest accounting firms in the US for the estate return and "new trust" creation. Day-to-day bookkeeping and tax returns we'll handle ourselves. I am an Enrolled Agent (admittedly one of limited experience regarding aggressive tax positions) and following my father's death years ago DM and I got a lot of experience preparing and filing trust income tax returns.

I'm not totally clear on your argument, but it sound like you're reading 508c1A as

("conventions" or "association of churches")

whereas I read it as

("conventions or associations" of churches)

If you really believe the former interpretation is correct...and that you don't need to have a church to be exempt, only a grantor and a trust as parties...then why isn't the strategy more popular? And why use a religious name for what is not a religious organization, if you're not trying to pose as one and stay under the radar? Or do you actually operate a church, conforming to the general guidelines provided by the IRS? https://www.irs.gov/charities-non-profits/churches-religious-organizations/churches-defined

The strategy isn't popular due to excellent marketing by the In God We Trust/USA Inc. via it's marketing and collection division called the IRS. 

I have been using this method for a decade with no issues of any kind nor my thousands of clients.  In God We Trust/USA Inc pays zero income or property taxes like all churches with no 501c3 exemption letter proving all government land and the government itself is a 508c1A trust. 

One can't use the word trust or bank in the name of your business as the last word in the name unless it is a bank or trust acording to the secretary of state in all states.

One can easily look up any tax exempt church or government land and find they have no 501c3 letter proving they are 508c1A.  Government is a convention not a church.  Proof positive.   

https://pennsylvaniadb.com/company/3122935/in-god-we-trust-u-s-a-inc

-------------------------------------------------------------------------------------------------

General update:

DM applied online for an Ink Unlimited using the TIN for one of the trusts. Instant decline.

It can be easier to build a credit profile for your trust via net 30 and similar accounts to make getting bank issued credit cards easier.

We called for an appointment and met with the branch CPC contact, whom DM had met with previously.

He told us that because the trust wasn't an LLC/Partnership/Proprietorship/Corporation that we were ineligible for their business cards...even though we were operating a business that had a legal existence separate from the owners/beneficiaries. Then he talked about how wonderful CPC was, without really getting into specifics.

He told us to apply for personal credit cards and to use them for trust business. Then he talked about how wonderful CPC customer service was. Hoping it would help him see us as attractive customers, I told him I knew it was good, having formerly been in their JPM Private Client Direct group of customers via Bear Stearns. He was clearly unfamiliar with it (he only knew about JPM Private Bank), but I think he got the idea I wasn't going to be easily seduced by the idea of CPC.

Eventually our lack of acceptance of resorting to personal credit cards got him to call the recon line. Recon denied us for being too new. He said we should maybe reapply in a few years when we had more history.

I got a little agitated at that point. I told him that while the trusts were a new legal entity, we had no debt, no vacancies, and as he could see in front of him we had a lot of cash already on deposit. I said I was hoping we could build a credit history for the trusts with Chase in case we wanted to get a real estate purchase line of credit in the future.

That seemed to help things a little. He called recon again and they asked for some paperwork that we had already given to Chase when setting the trust accounts up. We gave it to them (again) and the application is currently back to "pending" as they review it.

One thing that really irritated me was that in praising CPC, he said it would be great for refinancing the mortgage currently on our commercial property. Of course, this showed:

A: He wasn't listening when I said we had no debt. No debt means no existing commercial mortgage to refinance.

B: The fact he had already said he couldn't lend to the trusts didn't stop his natural sales pitch.

I still feel a bit agitated and I know this may not all be clear. But in summary, my interaction with CPC would suggest a new slogan:

"We promise solutions to your future complex problems while ignoring the only slightly complex ones you're facing today (which we don't understand, anyway)!"

Bankers know little to nothing about trusts, that is true.  Lack of knowledge about trusts by bankers in my experience is ubiquitous.  Try to get used to it. 

[Liberty33]

We used one of the ten largest accounting firms in the US for the estate return and "new trust" creation. Day-to-day bookkeeping and tax returns we'll handle ourselves. I am an Enrolled Agent (admittedly one of limited experience regarding aggressive tax positions) and following my father's death years ago DM and I got a lot of experience preparing and filing trust income tax returns.

I'm not totally clear on your argument, but it sound like you're reading 508c1A as

("conventions" or "association of churches")

whereas I read it as

("conventions or associations" of churches)

If you really believe the former interpretation is correct...and that you don't need to have a church to be exempt, only a grantor and a trust as parties...then why isn't the strategy more popular? And why use a religious name for what is not a religious organization, if you're not trying to pose as one and stay under the radar? Or do you actually operate a church, conforming to the general guidelines provided by the IRS? https://www.irs.gov/charities-non-profits/churches-religious-organizations/churches-defined

The strategy isn't popular due to excellent marketing by the In God We Trust/USA Inc. via it's marketing and collection division called the IRS. 

I have been using this method for a decade with no issues of any kind nor my thousands of clients.  In God We Trust/USA Inc pays zero income or property taxes like all churches with no 501c3 exemption letter proving all government land and the government itself is a 508c1A trust. 

One can't use the word trust or bank in the name of your business as the last word in the name unless it is a bank or trust acording to the secretary of state in all states.

One can easily look up any tax exempt church or government land and find they have no 501c3 letter proving they are 508c1A.  Government is a convention not a church.  Proof positive.   

https://pennsylvaniadb.com/company/3122935/in-god-we-trust-u-s-a-inc

-------------------------------------------------------------------------------------------------

General update:

DM applied online for an Ink Unlimited using the TIN for one of the trusts. Instant decline.

It can be easier to build a credit profile for your trust via net 30 and similar accounts to make getting bank issued credit cards easier.

We called for an appointment and met with the branch CPC contact, whom DM had met with previously.

He told us that because the trust wasn't an LLC/Partnership/Proprietorship/Corporation that we were ineligible for their business cards...even though we were operating a business that had a legal existence separate from the owners/beneficiaries. Then he talked about how wonderful CPC was, without really getting into specifics.

He told us to apply for personal credit cards and to use them for trust business. Then he talked about how wonderful CPC customer service was. Hoping it would help him see us as attractive customers, I told him I knew it was good, having formerly been in their JPM Private Client Direct group of customers via Bear Stearns. He was clearly unfamiliar with it (he only knew about JPM Private Bank), but I think he got the idea I wasn't going to be easily seduced by the idea of CPC.

Eventually our lack of acceptance of resorting to personal credit cards got him to call the recon line. Recon denied us for being too new. He said we should maybe reapply in a few years when we had more history.

I got a little agitated at that point. I told him that while the trusts were a new legal entity, we had no debt, no vacancies, and as he could see in front of him we had a lot of cash already on deposit. I said I was hoping we could build a credit history for the trusts with Chase in case we wanted to get a real estate purchase line of credit in the future.

That seemed to help things a little. He called recon again and they asked for some paperwork that we had already given to Chase when setting the trust accounts up. We gave it to them (again) and the application is currently back to "pending" as they review it.

One thing that really irritated me was that in praising CPC, he said it would be great for refinancing the mortgage currently on our commercial property. Of course, this showed:

A: He wasn't listening when I said we had no debt. No debt means no existing commercial mortgage to refinance.

B: The fact he had already said he couldn't lend to the trusts didn't stop his natural sales pitch.

I still feel a bit agitated and I know this may not all be clear. But in summary, my interaction with CPC would suggest a new slogan:

"We promise solutions to your future complex problems while ignoring the only slightly complex ones you're facing today (which we don't understand, anyway)!"

Bankers know little to nothing about trusts, that is true.  Lack of knowledge about trusts by bankers in my experience is ubiquitous.  Try to get used to it.