People who want to leave behind financial or securities accounts for their loved ones typically want to do this in the easiest way possible. The answer might be to establish a Totten trust, which is considered a revocable trust.
Some people know of the Totten trust by a different name. It’s often called the payable-on-death account. It allows you to designate someone who will get the balance in your account when you pass away. These accounts are ideal for some situations because the beneficiary won’t have to go through the probate process to get the asset.
Does a Totten trust allow the person to have the assets before you die?
The person who you name as the payable-on-death designee can’t access the account before you pass away. You have full use of the account until you die.
One benefit to this type of trust is that you can revoke the designation or change it when you feel necessary. You can close the account or pull all the funds out so there is a $0 balance if you want.
A downside to this type of trust is that there isn’t a protection from creditors. If a creditor makes a claim against the account, your beneficiary won’t have what you intended them to receive.
Anyone who is leaving assets to their loved ones should ensure they have their estate plan in order. Most people will use several different methods for passing down assets in their estate plan. Ensuring that there aren’t any discrepancies and that everything is legally valid are important in these cases.