People who are trying to get their affairs in order need to think about how they can get their assets to their loved ones. Some people choose to do this through their will, but others aren’t satisfied that the will is sufficient. Another option is establishing trusts, but some people don’t want to do that.
One option that people can use if they only have cash-based accounts, such as checking or savings, that they want to get to their loved ones is known as a Totten trust. This isn’t like many other trusts because it only requires the account holder to fill out a payable-on-death designation form.
What does a Totten trust do?
When a person fills out the payable on death designation form, the person who’s named as the beneficiary will be able to receive the contents of the account when the account holder passes away. They will have to bring their photo identification and the account holder’s death certificate in order to access the account.
Financial accounts that are covered with a Totten trust don’t need to be put in the will or in any other trust. The payable-on-death designation will govern what happens to them when the account holder dies. Prior to their death, the designee isn’t able to access the account.
A Totten trust is only one option that people have for taking care of their loved ones. It’s an option that bypasses the probate process, but it’s only one component of a comprehensive estate plan. Working with someone familiar with these matters can help people to get their estate plan set up in a way that relays their wishes.