What Is A Totten Trust?
A Totten Trust is an informal Trust that is set up as a bank account. The person who sets up the Totten account is the Trustee of the account, and can name any person as the beneficiary of the account. Because the money is held in an account that you manage, you may deposit as much or as little money in the account as you like. Upon your death, the money will immediately be made available to the named beneficiary, who can carry out your funeral wishes.
Totten trusts exist in your name, may be transferred from one bank to another, may be closed out at will, and, depending on the bank’s terms, may accrue interest over time.
How To Set Up A Totten Trust
Since a Totten Trust is not technically a Trust, establishing one is a fairly simple procedure and doesn't require an attorney or Trust agreement. Your bank will likely be able to help you set it up and you should be able to create the account in a matter of hours. You might consider talking to a number of different banks about their policies and protocols around creating and managing Totten Trusts and find a bank that's right for you.
Communicating With Your Family
If you are setting up a Totten Trust to pay for funeral arrangements be sure to tell your family that you've set it up. Also, make sure they know which bank it's in, who the beneficiaries are, and where the paperwork is located.
To learn more about how to store important documents for your family, see our article Estate Planning Documents to Organize and Share.