How can you pass bank accounts to beneficiaries?

On Behalf of | May 28, 2024 | Estate Planning

One step that’s critical when you’re getting an estate plan is making a list of all your assets so you can ensure that you’re addressing all of them in the plan. The assets you have will need to be listed in your will or placed in trusts if you want to have a say in who will get them.

There are a few exceptions to what assets have to be placed in your will or trusts in your estate plan. One of these is your bank accounts. Each bank account can be handed down through a Totten trust, which is established through payable-on-death paperwork at the financial institution.

Limitations of a Totten trust

The primary limitation of a Totten trust is that it doesn’t allow the beneficiary to access the account before you pass away. Instead, you retain full control and use of the account’s funds until you’re gone. You can also change the beneficiary for each account as long as you’re still considered competent. Once you die, they must bring your death certificate to the bank so they can get access to the funds.

Quick warning

The accounts that you have a Totten trust for shouldn’t be included in your will or any other trusts. This is because there’s a chance they may conflict with each other if you change them in one place and not in the others. If that conflict occurs, it could be costly for your beneficiaries.

Creating a comprehensive estate plan is a vital task for all adults. Working with someone familiar with these matters is beneficial so they can help you understand exactly how to set things up to meet your goals.



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