A Totten trust is an estate planning tool often used to avoid probate for certain assets. While Totten trusts are easy to set up and can be altered/cancelled at any time while the settlor is alive, they do not provide very much protection for your assets. Given this fact, you should consult with a Conroe estate planning lawyer before deciding to set up this type of trust.
Totten Trusts for Probate Avoidance
When a person dies, the assets which comprise his estate can be held up in probate for months. This can cause undue hardship for beneficiaries who are depending upon receiving assets left to them. A Totten trust is one solution that may be useful in some instances.
When you meet with your Conroe estate planning lawyer to work out the particulars of leaving your assets he might recommend that you consider a Totten trust. Also called a payable-on-death account (POD), this type of trust is really a bank account into which provisions for transfer of assets upon death have been added. They are very popular because of the fact that the assets within the account do not pass through probate upon the settlor's death.
Setting Up the Totten Trust
The term “Totten trust” derives from a 1904 case called In re Totten. The court in this New York case determined that a person may open a bank account as trustee for another. The assets in the account are not available to the beneficiary until after the trustee's death. At such time the beneficiary can remove the assets once he has provided the bank with a certified copy of the death certificate and identification of the decedent. Other states have followed in approving this simple trust.
Setting up the account generally entails going to the bank and filling out the necessary forms. The bank must be given a copy, naturally. Once the trust is set up, the settlor has full access to the funds until his death.
Disadvantages of Totten Trusts
While Totten trusts are easy to create, they do have some distinct disadvantages:
• No provision is made if the beneficiary dies before the settlor. • The assets are not protected from creditors. • The assets that can be included are limited to deposited money. • Special clauses cannot be included in the trust.
If You Need Assistance with an Estate Planning Matter
If you are concerned about protecting assets in your estate from probate, a Conroe estate planning lawyer can help. Call to arrange a consultation with an attorney at Peterson Law Group: 979-703-7014 or 936-337-4681.
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