When you’re creating your estate plan, you may become focused on ensuring your assets receive the assets you want them to have. This is typically done through your will and trusts. Anything that’s included in the will must go through probate to get to your loved ones.
Some accounts that are held in financial institutions can be passed down through a payable-on-death designation. This enables you to name the person of your choosing on a form at the financial institution. The arrangement is sometimes referred to as a Totten trust.
How does the payable-on-death arrangement work?
When you name someone as the payable-on-death designee, they don’t gain access to the accounts while you’re living. You still have full use of the accounts and can do as you please with the contents of them.
The person you name can receive the assets in the account once you pass away. They will have to provide the bank with their photo identification and your death certificate in order to receive the contents.
It’s critical to remember that a payable-on-death designation can be changed as you see fit. This is only one small component of your estate plan, so you must be sure that you take the time to get everything else together. It may be beneficial for you to work with someone who’s familiar with your wishes and the laws that apply to your case. Once you have your estate plan in place, you can rest assured that your loved ones have a plan to follow when you pass away.