As a professional, I am here to give you a brief overview of what a Totten Trust Agreement is and how it works.
What is a Totten Trust Agreement?
A Totten trust, also known as a Payable on Death (POD) account or a savings account trust, is a type of revocable trust that is created to transfer assets to a named beneficiary when the account holder passes away. This type of trust is commonly used for small estates, as it is a simple and affordable way to transfer property without the need for probate.
How does a Totten Trust Agreement work?
A Totten trust is easy to set up. All you need to do is open a savings account and add the beneficiary’s name to the account. The account holder maintains full control of the account and can withdraw funds, change beneficiaries, or close the account at any time.
Once the account holder passes away, the beneficiary automatically becomes entitled to the account funds without the need for probate. The beneficiary will need to provide a death certificate and a valid ID to the bank to claim the funds.
Advantages of Totten Trust Agreement
A Totten trust has several advantages. Firstly, it is a simple and affordable way to transfer property without the need for probate. Secondly, it allows the account holder to maintain full control of the account while they are alive. Thirdly, it is a private arrangement that does not require court supervision, which means that the beneficiary can receive the funds quickly and easily.
Disadvantages of Totten Trust Agreement
There are also some disadvantages to a Totten trust. Firstly, it only applies to property that is held in the trust account. If the account holder has other assets that are not held in the trust, such as real estate or stocks, these assets will still need to go through probate. Secondly, the account holder cannot place conditions on the distribution of the account funds after their death.
In conclusion, a Totten trust agreement is a useful tool for transferring property without the need for probate. It is simple and affordable to set up and allows the account holder to maintain control of the account while they are alive. However, it only applies to property that is held in the trust account, and the account holder cannot place conditions on the distribution of the account funds after their death.