Estate planning should make things easier for your loved ones after you pass away. There are many different components that come together when you’re trying to set your plan up.
Most people think about their will when they’re trying to give their loved ones assets, but there’s another possibility – trusts. While many trusts have to be established and funded, Totten trusts are a bit different.
What is a Totten trust?
A Totten trust is created when you open a financial account and complete a payable on death designation. The person you name on this form will receive the contents of the account when you pass away. With this designation, the account won’t have to go through the probate process so the designated person can get the contents faster.
One thing to remember when you’re creating your estate plan is that you shouldn’t put the accounts with a Totten trust in your will. These will be governed by the terms in the documentation that you filled out at the financial institution. If you include them in the will and the will terms aren’t the same as the payable on death designation, the estate will have issues.
When you create a Totten trust by filling out the paperwork at the bank, the person you designate won’t have access to your account. They won’t be able to get into it until you pass away, so you don’t have to worry about that.
Making sure that each of your assets has a designated place to go when you pass on is critical. Understanding how estate planning components work with each other can help you to ensure that you have a comprehensive estate plan that your loved ones can follow.