What is a Totten Trust?
When it comes to a probate matter, a lot of creativity is involved, even in denominations. Totten trust accounts are 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 then 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 the 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 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.
How to Avoid Probate?
Totten trusts 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. Totten trusts is also another way to avoid the burden of going through probate because the transfers are automatic.
Living trusts and joint tenancy ownership both provide other ways to avoid probate. If the decedent’s estate is sufficiently small, it may be able to 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,” which skips probate altogether.
Talk to San Diego probate attorney Scott Grossman about your situation and any questions you might have. Call us at (888) 443-6590 for your FREE 30-minute telephone consultation. Also, order our FREE book The Insider’s Guide to California Probate and Trust Administration.