Banks raise money to fund lending by issuing certificates of deposit. When you enter into a CD agreement with a bank you are actually entering into a loan agreement. As with most types of the loan agreements, banks are unwilling to make changes to the agreement once it has taken effect. However, in some circumstances your bank may allow you to change the titling of a CD prior to the end of the CD term.
When you establish a revocable trust, you create a legal entity that takes possession of some of your assets; this enables you to pass assets to your heirs without them having to go through probate court. However, since you can make changes to a revocable trust, the Internal Revenue Service regards you and the revocable trust as one entity for tax purposes. Consequently, any accounts held in the name of the revocable trust are opened under your Social Security number. Therefore, banks typically allow you to transfer ownership of a CD to a revocable trust mid-term since doing so does not affect the Tax Identification Number listed on the account.
When a CD reaches maturity, it enters a grace period that can last for up to 10 days. At the end of the grace period, the CD renews and begins a new term. You have the option to close the account or make changes to it during the grace period. Most banks allow you to add or remove account owner’s during the grace period without having to close and reopen the account. Therefore, you can change the ownership of the account but keep the same account number.
Laws in many states allow you to add authorized signers to CDs and other bank accounts. Authorized signers have access to the account but have no ownership rights to the money in the account. Generally, you can only add an authorized signer to your account if you establish a power of attorney that gives a certain individual the ability to access the account on your behalf. Since authorized signers are not technically account owners, you can add or remove POAs and other authorized signers during the CD term.
Banks do not generally allow you to change the ownership of the CD during the contract term because of liability issues that could arise further down the line if people contested their removal from the account. However, most banks allow branch personnel to have some discretionary powers when dealing with accounts. If you have a long and well-established history with a particular bank, the bank manager may allow you to make changes to your CD if some kind of extenuating circumstances exist. Rules that prohibit changes being made apply the majority of the time, but exceptions are sometimes made for customers the bank regards as profitable.