Most estate planners want to spare their beneficiaries and heirs the delay of having a will go through probate. They prefer to structure their estate plan so that the intended loved ones can access their inheritance easily.
Trusts are handy vehicles for those doing their estate planning. If an estate is fairly small and not complex, however, the cost of a trust may give them pause. But what if there were an easier way?
Totten trusts could fit the bill
If the name is unfamiliar, that’s understandable. It’s just a fancy term for regular bank accounts with payable-on-death clauses attached.
A simple savings or checking account can become a Totten trust by designating beneficiaries to whom the account reverts upon the account funder’s death. During the funder’s lifetime, the beneficiary has no access to the funds.
How to convert an account
The simplicity of Totten trusts is a top reason why some Minnesotans often choose to incorporate them into their comprehensive estate plans. All one must do is visit their bank and request a form to name a beneficiary and change the account to one that is payable-on-death.
Other reasons to use Totten trusts
Not only do payable-on-death accounts dodge the lengthy probate process, but they also allow for private asset transfers that remain apart from the public record. That makes it simpler to bequeath an account to someone who might otherwise get overlooked in the public settling of the estate. Still another benefit to Totten trusts is that it leaves the beneficiary with immediate funds to manage the estate, e.g., pay property taxes, etc.
Want to learn more? Address questions and concerns to your estate planning professional.
