A Totten trust, which is a type of bank account, can be part of estate planning. You can set this up at your financial institution and name a beneficiary for that account.
You can choose virtually whomever you want as the beneficiary. Some people choose family members, such as their adult children. Others choose close friends or even organizations that they support. The beneficiary will take control of the account when you pass away.
You have control while you’re alive
That is one of the benefits of a Totten trust. You can add money to the account, or you can take money out and spend it. You can even close the account if you want to — meaning that the beneficiary would get nothing. If you decide to choose a new beneficiary, you can update the paperwork and make the switch. The person you name has no power over the account until you pass away.
An advantage of a Totten trust is that it doesn’t have to go through probate. Remember that the probate process could take up to a year. By using a Totten trust, the assets in the account immediately transfer to the beneficiary whom you have named. This speeds up the process, makes it difficult for other beneficiaries to challenge the estate plan and transfers assets to the next generation.
These trusts are not for everyone, but you can see how they have some significant advantages. It’s important to understand all of the legal options you have while setting up your estate plan. Having experienced legal guidance as you do will help.