Lesson 7: Opening a Bible Trust Checking Account

Jerald Finney
Copyright © January 5, 2022

Go to the following webpage for links to additional lessons:
Lessons on the Bible (Common Law) Trust

 Remember that this is a Bible trust, not a church, checking account. The trustee, not the pastor, is opening the account. The trustee may be the pastor, but he is not acting as the pastor when he opens the trust account. Never refer to the trustee as pastor when he is functioning in his capacity as trustee and vice versa. The trustee should not begin by saying to the financial institution, “I am the pastor of [such and such] church and wish to open a “checking account,” or “church checking account,” or “trust checking account.” He should say, “I am the trustee of [Name of Trust] and I want to open a trust checking account.” I know it is easy to say “pastor” when referring to the “trustee” and vice versa; but It is very important to act and speak properly when the trustee is carrying out his duties as trustee; likewise, for the pastor.

The trustee goes to the financial institution with the executed trust documents. The documents should be in a file; or better, they should all be stapled together as follows: Cover Page with the name of the trust on top then the listing of the documents: The Resolution to Adopt the Declaration of Trust, the Declaration of Trust, and the Appendix(s). He speaks to an officer of the financial institution. He says, “These documents declare the trust and all aspects of the trust relationship.” Usually, but not always, the officer will look it over and state that he will refer the matter to the legal department to examine the documents.

The financial institution will usually require an Employee Identification Number, but some banks will use the Social Security Number of the Trustee. One bank recently stated that they would not use the EIN, only the trustee’s Social Security Number. Once the legal department looks at the documents, the account is usually OK’d. The trustee will open the account with an EIN or his SSAN, depending on the institution’s requirements.

Getting an EIN “for banking purposes only” does not compromise the status of the trust as a non-legal entity. The EIN is “for banking purposes only” and serves merely as an identification number for the account, not an actual identifying number for employees; the common law or Bible trust has no employees since it is a relationship with property with certain characteristics, not some kind of organization. To obtain an EIN, the trustee must fill out and submit Form SS-4 to the IRS. The trustee should not apply for the EIN online because the online application can be used to argue that the trust is a legal entity. Even though this eventuality may never occur, the online application should not be used. The trustee is holding and managing the Lord’s property. He should strive to do all aspects of his duties correctly and with knowledge, wisdom, and understanding.

The trustee should not fill out the SS-4 improperly. The trustee should carefully fill in the SS-4 according to the instructions on page 2 of the SS-4 and which are explained in the detailed PowerPoint which I send him.  Filling out the form improperly may open the door to the argument that the trust is legal entity. For example, line 6 states, “County and state where the principal business is located.” A trustee, acting alone several years ago filled in that line, even though I sent him a PowerPoint explaining exactly how to fill out the form. I cleaned up the matter in my subsequent letter to the IRS explaining the reasons that form 1041 was not appropriate for the common law trust; but, since that experience, pastors, at my request, have sent me a copy of the completed form before submitting it. Now, I go over the form with the trustee, over the phone, after we have both pulled it up on our computers. One pastor, after we did this just a few days ago, found that he was unable to submit the form online.  Then, he discarded it and filled out the online application and submitted it without consulting me. He said that after filling out the application, he felt there were more pages, hit the wrong button, thereby submitting the application instead of going to more pages—there were no more pages. This was a mistake anyone could make, but this was a valuable lesson for us all. The IRS almost immediately emailed the trustee granting an EIN and stating that the trustee should yearly submit form 1041 (see below for more on this). I will soon draft a letter to the IRS explaining the common law trust and correcting the misunderstandings that could be raised by the online application.

The IRS sends a letter to all the trustees granting the EIN. The letter also informs that trustee that he must yearly submit IRS Form 1041, regardless of whether the application was correctly filled out or not. At this point, I draft and send, Certified Mail Return Receipt Requested, cc Trustee, the IRS a letter explaining why Form 1041 is totally inappropriate and inapplicable. The first time I encountered this matter was in 2017. Since then, every church receives such an instruction from the IRS. In every instance, I have submitted a letter of explanation to the IRS. That has taken care of the issue in every instance with no further IRS communication on the matter.

For more details on the matter of the EIN “for banking purposes only,” to include links to letters to the IRS regarding IRS Form 1041 and other matters, see Obtaining a Church Common Law Trust Employee Identification Number “For Banking Purposes Only.”

The account should not be classified as a “business” account. The trust is not a business, as the documents make clear. The account is more correctly a personal account since the trustee is the legal owner of the account, the Lord Jesus Christ the actual owner. Remember, as stated in the documents, the legal owner is bound to handle all properties (which includes money and bank accounts) in the trust estate solely for the benefit of the Lord Jesus Christ according to His will as given in the Bible, not for his own benefit. The documents make clear this and all relevant matters (to include that the trustee receives no compensation and therefore cannot be called an employee). Should the bank insist on opening a “business” account, the trustee should go to another bank.

Some, if not most, banks only have “personal” and “business” accounts. The trustee should examine the paperwork to make sure that he is not opening a business account. If the paperwork indicates that it will be a business account, the trustee should point out that the account is more correctly personal. The trustee, as legal owner, is opening the account. He has the fiduciary duty to manage the funds in the account for the beneficiary, the true, beneficial and equitable owner of the property (which included money and bank accounts) held in the trust estate solely according to the will of the beneficiary, the Lord Jesus Christ according to His will as given in the Bible.

What should the trustee do should the bank refuse to open the account as personal rather than business? Recently, two trustees had to face this dilemma. A trustee in Wyoming, with the permission of the bank, struck out all references to “business” on the agreement before signing it. In another case, the bank would not remove references to “business” on the agreement in order to open the account. However, bank officials assured the trustee and Jerald Finney that the business designation was for banking purposes only and that it did not declare that the trust was a business. The bank, as always, had examined the trust documents before agreeing to open the account; and those documents make clear that the trust can in no way be a business. The trustee opened the account, but plans to look for another bank in the area to see if he can get a properly designated account.

All trustees have been able to open a bank account. Most have had this success at the first bank they visited. Some have had to go to a second bank. Only one that I can recall has had to go to a third bank.

Remember to tell all givers to give to “[Name of Trust],” not to [Name of Church].

Always remember that I, as your servant in the Lord, am here to help in any matter. Please do not hesitate to contact me for any reason. God bless.

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