Creating an estate plan usually involves making a list of assets you have so you can craft a plan for what will happen to each one when you die. Many of these assets will be passed down via your will.
One type of asset that you need to think carefully about is your financial accounts. These assets should not necessarily be included in your estate plan documentation, however, because you can use a Totten trust to pass to the person of your choice.
Totten trusts are revocable
You can set a Totten trust up at the financial institution that’s holding the account. This resource is sometimes referred to as a payable on death designation. You can change the designee when you desire.
How does the Totten trust work?
Accounts that are covered by a Totten trust shouldn’t be included in your will or any other trusts because the payable on death designation is what will govern the distribution of the account at issue.
Setting up a Totten trust doesn’t provide a beneficiary with access to the account while you’re living. You will continue to use it like normal until you pass away. Once you die, the person you’ve named must bring in a copy of your death certificate and their photo identification in order to access the account.
A Totten trust bypasses the probate process, so a beneficiary doesn’t have to wait on that process to complete before they can access the account. This also allows them to receive the contents of the account without it being read into a public court record.
Getting Totten trusts set up is an important consideration during the estate planning process, but there are other steps to take, too. Working with a legal professional who understands your wishes and can help you to ensure their relayed in a legally enforceable manner can be beneficial accordingly.