Some people who have smaller estates with fewer assets attempt to use a simple will to address their estate. They may not have enough property and resources to need a trust to dispense their worldly goods.
But situations can crop up where a will falls short of the mark. If only there were an estate-planning vehicle that fell somewhere in between. If those are your thoughts, a Totten trust might serve you well.
What is a Totten trust?
Simply put, a Totten trust is not a trust at all. It’s a name given to payable-on-death bank accounts. The name stems from an old New York state case from past centuries, In re Totten, and it could be the answer to your estate-planning worries.
Who might need a Totten trust?
Anyone who wants to include someone in their estate plan who might not otherwise be a traditional heir. For instance, maybe you have a special friend who has always stood by you throughout your life. Or suppose you had a secret child out of your marriage and don’t want them to be left out when you pass.
But Totten trusts are not just for affair partners or unacknowledged children. They are an effective way to pass on wealth while avoiding probate and public knowledge.
Other benefits of these accounts
Unlike irrevocable trusts that cannot be changed, the account owner retains full ownership of the account until they pass away. They can add to the account balance and make deductions, move funds around, change the beneficiary of the account or close it out entirely.
If you want to learn more about this handy estate planning tool, address the matter with your estate planning professional.
