Creating an estate plan means taking the time to think about every asset and determine how to pass it down to the intended beneficiaries. While many people think that all assets should be included in the will, that’s not the case.
Some assets, such as financial accounts, don’t necessarily have to be included in the will. There’s another option that can get those accounts to the intended beneficiaries quickly and easily after your death.
Totten trusts govern financial accounts
A Totten trust is a type of revocable trust that is easy to establish. When you go to open a financial account, such as a savings or checking account, you can set a payable on death designation. That designation is also known as a Totten trust.
Once you set someone as the designee, that individual will be able to get the funds in the account after you pass away. They have to bring their photo identification your birth certificate to access that account. Before you die, the designee won’t have access to the account unless you add them to the account. This enables you to continue to use the account as usual.
The accounts that are governed by the Totten trust shouldn’t be included anywhere else in the estate plan. The financial institution will handle the account according to the payable on death designation, but there can be complications if those accounts are assigned to someone else in the estate plan.
The Totten trust is only part of an estate plan, so it’s critical that you think about everything that needs to be included in the plan. It may be beneficial to work with someone who’s familiar with your situation so they can help you to develop a plan that accurately reflects your wishes.