A major task that you must handle when you’re getting an estate plan together is making sure that you have a plan for every asset. Many people focus on the larger assets, such as investments and their home, but there’s another asset that might be overlooked—bank accounts.
Bank accounts can be handled a bit differently than many other assets. You can use a Totten trust to easily dictate who will gain access to the account’s funds after you pass away. This type of trust is set up by filling out a document at the financial institution. It’s also known as a payable-on-death designation.
What does the Totten trust do?
A Totten trust allows you to name the person who will get the account when you die. In order to access the funds, they have to produce their photo identification and your death certificate, so they don’t have any access to the account before you die. As long as you’re living, you have complete control of the account and can use the funds as you see fit.
Do you need to do anything else?
Once you set up the Totten trust for the account, you should simply put the applicable information in a document that your loved ones can access when you die. You shouldn’t put the account in the will or any other trusts. It’s critical that each asset is only governed by one set of instructions to avoid potential issues in the future.
Remember, the Totten trust is only one part of a comprehensive estate plan. You still need to get the other components set up so your loved ones know exactly what they need to do. This might be easier if you enlist the assistance of someone familiar with these matters.