Home » Blog » Understanding Totten Trusts: A Guide to Payable on Death Accounts and Avoiding Probate
Understanding Totten Trusts: A Guide to Payable on Death Accounts and Avoiding Probate

Understanding Totten Trusts: A Guide to Payable on Death Accounts and Avoiding Probate

Troy Werner and his family

Written by Troy Werner

Troy Werner has been an indispensable asset to The Werner Law Firm since joining in 2009, providing exceptional legal service to its clients.

Get To Know Troy!
POSTED ON: February 5, 2024

This article aims to provide you with a detailed understanding of Totten Trusts, a vital component in estate planning that can significantly simplify the process of transferring assets upon death. Let’s explore how Totten Trusts can help you avoid the lengthy probate process and ensure a smooth transition of your assets…

This article aims to provide you with a detailed understanding of Totten Trusts, a vital component in estate planning that can significantly simplify the process of transferring assets upon death. Let's explore how Totten Trusts can help you avoid the lengthy probate process and ensure a smooth transition of your assets.

Introduction to Totten Trusts

A Totten Trust, often known as a Payable on Death (POD) account, is a straightforward yet powerful estate planning tool. It's a type of bank account that becomes a trust upon the account holder's death, allowing funds to be directly transferred to a named beneficiary. This unique form of trust is a revocable trust, meaning that you can change the beneficiary or close the account at any time during your lifetime. Learn more about Totten Trusts at American Bar Association.

The Role of Totten Trusts in Estate Planning

In estate planning, a Totten Trust is an efficient way to transfer money without going through probate. Since the Totten Trust is a type of revocable trust, it offers flexibility while providing a secure way to designate who will receive the assets held in the account upon your death.

Totten Trusts Explained

Totten Trusts are sometimes called a "poor man's will" because they are an easy way to transfer assets at death without needing a will or going through probate. Essentially, a Totten Trust is a bank account with a named beneficiary, distinct from other types of trusts because of its simplicity and ease of setup.

Totten Trust as a Type of Trust

Though simple, a Totten Trust is a legitimate form of trust recognized in the United States. It is a revocable bank account trust that allows you to transfer money to a beneficiary immediately upon your death without the hassle of probate. Understand the legal basis of Totten Trusts at Cornell Law School's Legal Information Institute.

Setting Up a Totten Trust

To set up a Totten Trust, you must open a bank account or convert an existing account into a Totten Trust by completing the paperwork provided by the bank. This process involves naming a beneficiary who will receive whatever is in that account upon your death.

Choosing a Bank Account for Your Totten Trust

When selecting the type of bank account for your Totten Trust, consider checking accounts, savings accounts, or even certain types of securities. The key is ensuring the account or security aligns with your estate plan and financial goals. (For information on different types of bank accounts, visit Consumer Financial Protection Bureau.)

The Benefits of Using a Totten Trust

Using a Totten Trust can help you avoid the lengthy probate process, ensuring that the beneficiary can access the funds in the account immediately upon your death. It's a straightforward, cost-effective way to transfer assets outside of probate.

Ease of Transfer and Management

Totten Trusts offer ease of transfer and management, allowing you to change the beneficiary at any time and maintain complete control over the funds in the account during your lifetime. This flexibility is a significant advantage of using Totten Trusts in estate planning.

Designating Beneficiaries in Totten Trusts

When you set up a Totten Trust, you name a beneficiary who will receive the assets held in the account upon your death. This straightforward process can be updated anytime, offering flexibility and peace of mind.

Changing the Beneficiary Designation

As the account holder, you have the right to change the beneficiary designation of your Totten Trust at any time. This revocable nature ensures that your estate plan remains adaptable to your changing life circumstances.

Totten Trusts and Payable-On-Death Accounts

Totten Trusts and Payable-On-Death (POD) accounts are often used interchangeably. Both allow assets to be transferred directly to the beneficiary upon the account holder's death, bypassing the probate process.

Which is Right for You: Totten Trust or POD Account?

Choosing between a Totten Trust and a POD account depends on your financial situation and estate planning goals. Consulting with an experienced estate planning attorney can help you make an informed decision. (To compare Totten Trusts and POD accounts, see SmartAsset.)

Legal Aspects of Totten Trusts

The legal framework for Totten Trusts was established in a landmark case called In Re Totten. This case set the precedent for recognizing Totten Trusts as a valid form of revocable trust in the United States.

Revocable Nature of Totten Trusts

The revocable nature of Totten Trusts means that the account owner can change or cancel the trust at any time. This flexibility makes it an appealing option for many looking to simplify their estate planning.

Totten Trusts in Estate Planning

Incorporating Totten Trusts into your comprehensive estate plan can simplify transferring assets upon death. They work alongside other estate planning tools, like wills and living trusts.

Collaborating with an Estate Planning Attorney

Working with an experienced estate planning attorney is crucial in correctly setting up a Totten Trust. An attorney can guide you through the process and ensure that your estate plan aligns with your wishes and legal requirements.

Common Misconceptions and Pitfalls

One common misconception about Totten Trusts is that they can replace a will or a more comprehensive estate plan. While they are useful, they should be considered part of a broader strategy for estate planning.

Potential Risks and How to Avoid Them

The main risk associated with Totten Trusts is the possibility of disputes among beneficiaries or unintended consequences if not properly managed. Regular reviews and updates with your estate planning attorney can mitigate these risks.

Conclusion: Is a Totten Trust Right for You?

Totten Trusts can be a valuable part of your estate planning, offering a simple and effective way to transfer assets. However, they are not suitable for everyone, and their use should be tailored to your individual needs.

Assessing Your Individual Needs

Consider your overall estate planning goals and how a Totten Trust fits into that picture. Are you looking for a simple, cost-effective way to transfer specific assets? Do you need a more comprehensive plan? These are essential questions to ponder.

Next Steps and Further Resources

If you're considering a Totten Trust as part of your estate plan, I encourage you to schedule a call with me. As an experienced estate planning attorney, I can help you navigate the complexities of estate planning and ensure that your plan meets your needs and complies with legal standards.

Key Takeaways:

  • A Totten Trust is a simple, revocable trust that directly transfers assets upon death.
  • It's essential to choose the right bank account and designate beneficiaries carefully.
  • Totten Trusts can help avoid probate but should be part of a comprehensive estate plan.
  • Regular consultation with an estate planning attorney is vital to ensure your Totten Trust aligns with your overall estate planning goals.

Remember, every estate plan is unique, and a Totten Trust might be the right choice for you. If you need help to set up a trust, we can help. Contact The Werner Law Firm probate attorneys in Los Angeles for a free consultation.

If you have any questions, schedule a free appointment with us through our online appointment page.

You can also read reviews from some of the hundreds of clients we have helped over the years.

Share This Post

Why Our Living Trust Law Firm & Probate Attorneys?

Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.

Whether you need help creating a living trust or navigating probate, our living trust law firm's compassionate team of estate planning lawyers and probate lawyers are here to help you and ready to answer your questions.

Our goal is to make your case as easy as possible for you. Hiring a lawyer can be a daunting task, but it doesn’t have to be. From the moment you contact our firm, through the final resolution of your case, our goal is to make the process easy and understandable. We cannot change the fact that probate is a long and complicated process, but through our Werner Law Firm Difference, we strive to go out of our way to keep you informed of your case through every step of the way. We are constantly refining our processes and procedures for a more streamlined and calm client experience. Our goal is to have you feel like a burden was lifted from your shoulders, and that we made the whole process an easy one

If you're dealing with a legal matter, we urge you to schedule a free initial appointment today and join the many satisfied clients who have contacted Werner Law Firm.

Book an Initial Call Now

Join Our eNewsletter and our California Estate Planning and Probate Blog Digest

Werner Law Firm logo
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. See full disclaimer here.
Santa Clarita, CA Office

27433 Tourney Rd, Suite 200
Santa Clarita, California 91355

Los Angeles, CA Office

445 S. Figueroa St., Suite 3100
Los Angeles, California 90071

Bakersfield, CA Office

4900 California Ave, Tower B-210
Bakersfield, California 93309

Newport Beach, CA Office

23 Corporate Plaza Dr., Suite 150
Newport Beach, California 92660

Lancaster, CA Office

626 W Lancaster Blvd.,
Lancaster, California 93534

Pasadena, CA Office

35 North Lake Avenue, Suite 710
Pasadena, California 91101

Simi Valley, CA Office

2655 First St, Suite 250
Simi Valley, CA Office, California 93065

Encino, CA Office

15760 Ventura Blvd, Suite 700
Encino, California 91436

Oxnard, CA Office

300 E Esplanade Dr., 9th Floor
Oxnard, California 93036

Santa Barbara, CA Office

7 W. Figueroa St., Suite 200
Santa Barbara, California 93101

IMS - Estate Planning and Elder Law Practice Growth Advisors
Powered by