All adults should have an estate plan that enables them to let their loved ones know what to happen with their assets when they die. This will typically include a will, but it may also include trusts.
While many people think of trusts as something only wealthy people will need, the Totten trust is one that anyone can establish as long as they have a checking or savings account. This is a way to get the contents of those accounts to beneficiaries without having to go through the probate process.
How is a Totten trust established?
A Totten trust is established when a person fills out a payable-on-death designation for the financial account. This lets the bank know who will get the contents of the account when the account holder dies. The designee will have to provide the death certificate to access the account. This may take a bit after the death, but it can still transfer those assets faster than if the person had to wait on the probate process.
A Totten trust doesn’t allow the designee to access the account prior to the account holder’s death. This allows the account holder to name a designee without having to worry about that individual spending the money or making financial decisions.
The Totten trust is only one part of a comprehensive estate plan. Creators also need to ensure they have other components, such as their will and power of attorney designations set. Working with an individual who’s familiar with estate planning and who can help them lay the plan in the event they become incapacitated or when they pass away is beneficial.