People who are creating an estate plan need to determine the best methods for ensuring their chosen beneficiaries will receive the specific assets the creator wants them to get. There are several estate plan components that can accomplish this.
Some assets can be passed down using a will, but others will need a little more structure. This is when the creator can use trusts. One type of trust that some people aren’t aware of is the Totten trust.
How does a Totten trust work?
A Totten trust is also known as a payable on death designation. This is used for specific financial accounts, such as checking and savings. It’s possible to name the beneficiary as soon as the account is opened, and the person named can change as the account holder wishes.
Once the account holder passes away, the beneficiary brings a valid driver’s license or photo identification and a copy of the death certificate to the bank. They can then access the funds in the account.
The beneficiary doesn’t have access or control over the account while the account holder is alive. The exception to this is if the beneficiary is named a joint account holder.
Any accounts that are part of a Totten trust shouldn’t be included in any other parts of an estate plan. Individuals who are interested in setting up an estate plan should ensure their wishes are accurately relayed to make it easier for their loved ones to know those wishes.
