When talking about trusts, there are many labels and terms to keep in mind. It can be very confusing, and some trusts are rather complex endeavors. They may have the primary purpose of something like asset protection for a veteran or to provide for a family member with special needs. However, the idea of a trust is rather simple (a fiduciary relationship in which a trustee manages property originally owed by the trustor for the benefit of a beneficiary), and there may be a trust that fits a particular family’s estate planning needs perfectly. Nashville estate planning attorney Randy Ratliff advises middle Tennessee families with regard to many different estate planning tools, including so-called “Totten trusts.”
When it comes to trusts, it would be difficult to imagine a less complicated trust than a Totten trust. Sometimes referred to as a “poor man’s trust,” a Totten trust is created when a bank account holder completes paperwork directing the bank to pay out the remains of the account to a third party at his or her death. These “payable on death” (or POD) accounts are completely revocable, meaning that the holder of the account can change his or her mind and revoke the trust at any time prior to his or her death. A Totten trust is owned completely by the trustor until his or her death, with the potential beneficiary not having any vested interest in the account until the trustor has passed away.How a Totten Trust Helps a Family Avoid Probate
A Totten trust can be useful in helping a family avoid probate because the assets of the account pass automatically to the POD beneficiary without the formal court proceedings known as probate. If the trustor’s estate consists solely of the funds in the payable-on-death account, the settlement of the trustor’s final affairs is simple: usually, the beneficiary need to simply present proof of his or her identity and the trustor’s death to the bank, and the bank will release the fund within a reasonable time. Totten trusts got their name from a 1904 court decision (In re Totten), which declared that the procedure described above was permissible under New York law. Since then, many other states, including Tennessee have also permitted these types of tentative trusts. An experienced trusts and estates lawyer can assess whether this type of trust is right for you.
It may seem that, for a person of modest means, the creation of a Totten trust may take care of all of that individual’s estate planning needs. While a Totten trust can be useful for disposing of certain assets, the use of such a trust is very limited (for example, real estate cannot be passed via a POD arrangement), and there are several drawbacks to such an account – including the possibility that it could be attached by the trustor’s creditors prior to his or her death. In such a situation, the beneficiary may receive nothing. There are many other types of estate planning tools that should be considered as part of and thoughtful and effective estate plans. These may include a will, health care directive, and/or other kinds of trusts.Get Your Affairs in Order by Contacting a Nashville Estate Planning Attorney
Planning for one’s estate and other future needs, such as the possible need for long-term medical care, does not have to be a difficult task. With proper planning and attention to detail by a qualified estate planning lawyer, the task can be taken care of with a minimum of time and expense. To schedule an appointment with the Randy Ratliff Law Offices, PLLC, call us at 615-656-8282 or contact us online to set up a consultation at your convenience. In addition to Nashville, we serve all of Davidson and Williamson Counties, including Madison, Goodlettsville, Hermitage, Antioch, Joelton, Franklin, Brentwood, Nashville, and Cool Springs.