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How is a Totten trust helpful in estate planning?

On Behalf of | Jan 7, 2024 | PROBATE & ESTATE ADMINISTRATION - Estate Planning

Estate planning can present numerous challenges. Totten trusts, known as payable-on-death accounts, simplify transferring assets. They allow individuals to pass on specific financial accounts without the complexities and delays of traditional estate planning.

Totten trusts are easy to set up and manage. By assigning a beneficiary to a bank or investment account, the assets within are smoothly transferred upon the account holder’s death. This bypasses the need for probate, offering a quicker and more direct transfer of assets.

Understanding how Totten trusts work

A Totten trust is created when an individual names a beneficiary on a bank or investment account. This process is usually straightforward, involving a simple form from the financial institution. The account holder maintains complete control over the funds during their lifetime. The beneficiary doesn’t have access until after the account holder’s passing.

Key benefits of using Totten trusts

One significant advantage of Totten trusts is their ability to bypass the probate process. Since the assets in these accounts are directly transferred to the beneficiary, they don’t become part of the estate subject to probate. This leads to a faster and more efficient transfer of assets. It also reduces the time and expenses typically associated with estate administration. Totten trusts offer a degree of privacy not found in probate, as the transfer details aren’t made public.

Another benefit is the flexibility and control they offer. The account holder can change the beneficiary anytime and access and use the funds as needed while they are alive. This level of control ensures that the account holder’s current financial needs aren’t compromised while still planning for the future.

Totten trusts are part of a comprehensive estate plan. Getting this set is critical, but you can’t neglect the remainder of the plan. Working with someone familiar with your situation and wishes can help you to get everything set properly.