Everyone age 18 and older should have at least a basic estate plan in place. While some people require complex financial vehicles like generational trusts, many people can get by with just a few basic documents.
One example of these is a Totten trust. Read on to learn more and determine whether you need one or not.
The name is a misnomer
Totten trusts are not trusts at all in the usual sense. Rather, they are payable-on-death accounts that can only be accessed by beneficiaries after the account holder has passed away.
The name is derived from a 19th-century New York court case, In re Totten, wherein the courts determined that one person can open a bank account for another. These accounts have also been dubbed “poor man’s trusts,” although people of all income levels can benefit from them.
What the accounts do
During the account funder’s lifetime, the funds can be used, transferred, depleted and withdrawn by the one who funded the account. They have full rights to close the accounts and change the beneficiaries at will.
But once the account funder dies, these funds get transferred to the beneficiary without having to wait for probate to conclude.
Who can benefit?
Anyone who might not be a traditional beneficiary could benefit from Totten trusts. Think life-long friends, god-children, loyal employees and anyone else with whom the trust grantor shared a special relationship.
There are no limits to the number of Totten trusts that can be funded.
Is your estate plan complete?
Give yourself the peace of mind that a solid estate plan can provide. Learning more about your options is a wise choice to make.