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3 things to know about a Totten trust

On Behalf of | Nov 22, 2023 | Estate Planning |

Creating your estate plan requires you to consider every asset you own. For some people, their financial accounts are a major concern. The good news is that you can easily pass these down to your loved ones. 

Most financial accounts have a payable-on-death designation. This is formally known as a Totten trust. These trusts make it simple for the beneficiary to receive the funds in the account from the financial institution.

1. They’re easy to establish and update

Establishing a Totten trust is simple. You just have to fill out the form at the financial institution. This is a revocable trust, so you can change it as you deem necessary. You just have to go to the bank and revise the paperwork for the account. 

2. A beneficiary only has access after your death

The beneficiary of the account will only have access to the contents after you pass away. They won’t be able to take money out or use the account until they produce proof of death to the financial institution.

3. Will inclusion isn’t necessary

Once you have the payable-on-death designation in place, you don’t have to put the accounts in the estate plan. While it may be tempting to put the accounts in the will, it causes an issue if you don’t remember to change the estate plan but you change the Totten trust designation. 

Having a comprehensive estate plan in place provides your loved ones with a firm plan to follow when you pass away. This can give you peace of mind, but be sure to review the terms periodically so you can ensure it always reflects your wishes.