Every adult should ensure that they have a plan in place for after they pass away. There are several things to think about, one of which is getting your assets to your beneficiaries in the least costly, easiest and most effective manner possible. You can usually do this through wills and trusts, but there are some assets that have an even simpler option.
Financial accounts, including those for checking and savings, can be passed down to someone using a Totten trust. This is better known as a payable-on-death designation, which is handled through a form you fill out at the financial institution.
How does a Totten trust work?
A Totten trust doesn’t give the person access to your accounts while you’re still alive. You retain complete control and usage of the account and its contents as long as you’re living. Once you pass away, the person you named will have to provide the financial institution with their photo identification and your death certificate. Once they do that, they will gain access to the funds in the account.
It’s important that you don’t include the financial accounts that are governed by a Totten trust in your will or other trusts. Because these accounts have the payable-on-death designation, adding them into the estate plan could lead to issues if the designations in each location aren’t the same.
Your estate plan should outline all your wishes in a legally enforceable manner. Working with someone who knows your wishes and the options to make them a reality may reduce your stress as you get everything set up.