A trust is a powerful estate planning tool, and there is more than one way to create a trust, including…
When you wish to create a simplistic trust with a relatively small amount of cash, some people choose to create a Totten Trust, which is also referred to as a Payable on Death, or POD, account. A Totten Trust is a relatively simple arrangement since there is no detailed trust agreement, but rather a simple form provided by many financial institutions that allows you to name a beneficiary to receive the funds in the event of your death. The depositor keeps total control over the funds until his or her death. Upon the depositor’s death, the named beneficiary can be paid the funds when they present the death certificate to the institution.
Uniform Transfers to Minors Act
If you need to create a trust to manage money for minors, and if the amount involved is small, you may also set up a bank account under the Uniform Transfers to Minors Act (UTMA.) This law allows you to hold a bank account in the name of a minor, with an adult named as the custodian of the account. The minor child would receive the funds when he or she reaches a certain age, which varies by state and can be as young as 18 years old in a few states to as late as 25 years old. Until the time of final distribution, the custodian is able to use this money for the minor’s needs. Again, this is a simplistic tool that can be helpful in some cases, such as if your minor child inherits money from a grandparent.
The most effective way to create a trust is to work with a trust attorney or estate planning attorney to determine the type of trust best suited for your needs. The attorney will draft a trust agreement specifically tailored to meet your family’s goals.
- What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
- How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
- Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022