There are a lot of different trust options available to Palm Beach residents, and some of them are more well known that others. One type of trust that may not be very well known to the average layperson is known as the Totten Trust. In this article, we will discuss what a Totten Trust is and how it might be able to benefit you.
Many estate planners see Totten Trusts as an extra safe and extra inexpensive way to pass on assets to family members, and preferable to joint ownership strategies. A Totten Trust is a revocable trust created while the grantor (or trust creator) is still alive. The grantor will deposit money into a special bank account listing his or her name as Trustee.
The Totten Trust functions to hold the property it contains until the moment of the grantor’s death, or until the moment of an unequivocal act (or incapacitation). At this time, the named beneficiary, which can be an individual or entity, will receive the property.
One of the plus sides of a Totten Trust is that beneficiaries can avoid probate proceedings. Usually, Totten Trusts are used for investment and bank accounts held with financial institutions — particularly with regard to savings accounts, certificates of deposit and bank accounts. Totten trusts are not applicable to real property assets like real estate.
A Totten Trust is one of the cheapest to create. All that is necessary is to include identifying language on the financial account name, like “Payable on Death To,” “In Trust For” or “As Trustee For” and then name the beneficiary after this language. No written trust document is involved and setting up a Totten Trust is usually completely free. For this reason, they are often referred to as the “poor man’s trust.”
Still, a Totten Trust will not work for everyone and every situation. Therefore, it is advisable to discuss your trust planning strategy with a qualified trust attorney before deciding to create a Totten Trust yourself.
Source: FindLaw, “Types of trusts,” accessed Oct. 01, 2015