People who are creating an estate plan have to think about every asset they own so they can determine who to give each one to. Every asset you own should be included in the estate plan, but some assets have special considerations.
Your bank accounts are one of the assets that have special options for passing down to your beneficiaries. These accounts can have a payable-on-death designation, which is also known as a Totten trust. You can set this up at the bank by simply filling out a document.
How does a Totten trust affect your account?
A Totten trust doesn’t have any effect on your account or how you use it while you’re alive. The person who you name doesn’t gain access to your account until you pass away. This means that you can continue to use the account as you desire.
Once you pass away, the designee must bring photo identification and a copy of your death certificate to the bank. As long as the documents are valid, the bank is able to release the funds to the designee. This is typically a much faster process than what would happen if the account had to go through the probate process.
Your estate plan must be set up so it reflects your wishes. Ensuring the plan is legally enforceable is important. Working with someone who understands your wishes and can help you to make them known is critical.