Should I Use a Totten Trust?

A Totten trust, named after the case that first established the legality of this type of trust, is an extremely simplified way to create an estate plan for a single beneficiary. Totten trusts are essentially just bank accounts that are assigned from one individual to another once the account creator has died. Although this practice can provide for money to shift from one person to another after the settlor dies, it provides very few legal protections for that money.

To learn more about how an attorney can create a stronger testament for your family, contact the Houston wills and trusts lawyers of Garg & Associates, P.C., today at 281-362-2865.

The Downside of a Totten Trust

The Totten trust is occasionally jokingly known as a poor man’s trust, as it does not provide any of the legal protections of a regular estate plan. The only requirement for a Totten trust is the bank’s willingness to set up this kind of account. As a result of the trust’s actual legal nature, the settlor may use the account until his or her death, adding or reducing funds freely. However, there are several problems that may occur as a result of a Totten trust:

  • There are no lapse protections if the beneficiary dies before the settlor
  • Creditors may access the funds in legal proceedings
  • These trusts can only deal with funds and deposited assets
  • There is no support from probate courts

Essentially, there are no legal apparatuses available to protect these funds aside from the kind of insurance that is widely offered for bank accounts. These accounts cannot make special clauses or other sorts of legally enforceable stipulations. Instead, they only work as simple transfers of funds or deposited securities.

Contact Us

Creating an estate plan that can weather tough legal battles and challenges while offering specific directions on how property may be divided is available to those thinking about the future. With the help of an attorney, you can better protect your property division plan and better protect your family’s future. For more information, contact the Houston wills and trusts attorneys of Garg & Associates, P.C., by calling 281-362-2865.

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Garg & Associates, PC | 21 Waterway Avenue, Suite 300 | The Woodlands, Texas 77380 Please call 281-362-2865 | Fax: 866-743-4506
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Land, River Oaks, Alief, Stafford, Missouri City, and Southwest Houston Texas.