An overview of Totten trusts
There are many financial solutions for California residents who need to manage assets that will be left to their heirs in the future. In many cases, individuals with significant assets are looking for opportunities to minimize the risk of probate activity after their death. Additionally, many want to be able to continue to use their assets during their lives. A Totten trust is a financial tool that may accomplish such goals. A Totten trust is created as an individual establishes a bank account in their own name, depositing funds that are intended to benefit another party.
Totten trust assets remain in the control of the depositor until that party dies or until the occurrence of a specific act. For example, the depositor might deliver the pass book to the intended heir. Until such an unequivocal act takes place, the trust is tentative in nature and can be revoked at will. In some cases, a beneficiary might not even be informed of the account. It is important to be aware of potential claims on the funds in a Totten trust, especially if the creator of the trust has outstanding debts.
One of the main reasons for the use of Totten trusts in a desire to keep one's financial affairs private, which may be an issue for those who face challenging family situations. This could also provide a way of leaving assets to an individual without drawing attention to them. This type of trust is considered to be a testamentary substitute, bypassing the administrative activities of probate.
An individual who wants to address challenging situations involving their potential beneficiaries might discuss a wide range of options in trusts and wills with an estate planning lawyer. A lawyer might recommend specific trust options based on the types of assets a client possesses.