There are so many complex solutions to wealth distribution that sometimes some of the simplest answers get overlooked. Such may be the case of Totten trusts.
Don’t let the name fool you, as Totten trusts are regular bank accounts that have payable-on-death clauses added to them. Read on to learn more.
Benefits of Totten trusts
One top advantage of funding a Totten trust payable-on-death account is that the named beneficiary doesn’t have to go through probate to access the funds.
The details of the bequest also remain private by bypassing the public probate process. That allows estate planners to remember special people in their lives who might not have been traditional heirs or beneficiaries.
Account holders retain control
Since the named beneficiaries of Totten trusts only access the money once the account funder has passed, the funder retains full control of the funds until death. Unlike with irrevocable trusts, they can transfer and spend the funds and substitute beneficiaries at will.
Are they legal in Minnesota?
Yes. Totten trusts originated in the state of New York in the early years of the 20th century, but the concept spread quickly to other states as a viable alternative to more complex estate planning arrangements.
Do I need to fund a Totten trust?
Perhaps, especially if you want to remember a special friend or loved one who might be overlooked in a more traditional estate plan. Those who want to have control over the funds during their lifetimes also might want to learn more about funding these payable-on-death accounts.