Have You Ever Heard of Totten Trust Accounts in California?

When it comes to California probate matters, there is a lot of creativity involved, even in denominations. Totten trust accounts are also known as "savings bank trust" accounts or "pay-on-death" accounts.

The latter expression says it all. When a bank account is held in the name of, say, Diana Epstein, Trustee for Patrick Mueller, the account is owned by Epstein who is a trustee for the beneficiary (Mueller) who becomes the rightful owner upon Epstein's death.

The balance of the funds available on the account at the time of death does not have to be probated because the transfer of ownership is automatic.

Who may own a Totten trust account?

Totten trust accounts can be held by several trustees for the benefit of one or more parties. The funds held in the account do not even have to be separately owned. If the funds in the account came from community property, only one half of the account's balance will be transferred to the beneficiary of the Totten trust account upon the trustee's death. The other half belongs to the surviving spouse or domestic partner.

Avoiding probate

Pay-on-death accounts are one of the many tools available to those who wish to control the process of distributing their assets to named beneficiaries many years prior to their death. As such, they also free their surviving relatives and beneficiaries from the burden of California probate, because the transfers are immediate and automatic.

Living trusts, joint tenancy ownership, and tenancy in common provide other ways to avoid probate. If the decedent's estate (or the part of it that is not held in one of the forms just mentioned) is sufficiently small, it may also avoid probate under the "small estates" provision. Similarly, a decedent who is willing to leave his entire estate to his or her surviving spouse or domestic partner can file a "spousal property petition," another process that skips probate altogether.

Talk to San Diego probate attorney Scott Grossman about your situation and any questions you might have. Call us at (951) 683-3704 or (866) 840-0000 for your FREE 30-minute telephone consultation. Also, order our FREE book The Insider's Guide to California Probate and Trust Administration.

Loading