What does it mean for a bank account to be held “In Trust For”?

Bank accounts that are established “in trust for” designated beneficiaries, who will receive the account balance upon the account owner’s death, are referred to as Smith trusts and do not necessitate the involvement of the court. The owner of a Smith trust account is authorized to make withdrawals from the account during their lifetime, distinguishing this trust from other types. However, one drawback of a Smith trust is that if the beneficiary dies before the account owner, the court will be involved. Additionally, a Smith trust may avoid the need for court involvement, but it cannot bypass the requirement for a legal guardian or substitute a power of attorney. While the account owner is alive, the beneficiary does not have access to the account, even if the account owner is incapacitated and requires assistance from the beneficiary in accessing funds for medical expenses. In such a situation, the appointment of a legal guardian or a power of attorney becomes necessary.