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Advantages of a Totten trust

All Florida adults should consider making an estate plan, and for some, a Totten trust may be a good solution. A Totten trust is especially useful if someone wants privacy in their financial planning. With a Totten trust, a bank account is set up on behalf of a beneficiary that the owner deposits money into. At any time, the account can be closed or the owner can withdraw money from it. The beneficiary does not have to know about the existence of the account.

One limitation of the Totten trust is that the funds in it may be used by creditors if there is money owed by the decedent. However, the owner might also pass the trust to the beneficiary while still alive. Otherwise, the account passes to the beneficiary on the owner's death.

A Totten trust is called a testamentary substitute because it replaces a will. Therefore, it also eliminates the time and cost that probate requires.

There are many other circumstances in which a person may want to use a trust instead of a will or in addition to a will. One is the privacy issue. Probating a will is a public process, and some people may prefer that the details of their estate not be made public. Various types of trusts may be set up to do things such as protect an estate from creditors or place conditions on when heirs can receive their inheritance. However, planning for distribution of assets is not the only thing most people need to thing about when it comes to estate planning. An attorney may suggest documents such as a living will, a power of attorney and a health care directive to instruct loved ones on what to do in the event of the maker's incapacity.

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