Understanding Totten Trusts & POD Accounts: Simplifying the Intricacies
Posted October 6, 2025
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In today's increasingly complex financial landscape, the importance of planning for the future can't be overstated. While wills and living trusts often dominate discussions about estate planning, lesser-known instruments like Totten trusts and Payable On Death (POD) accounts also play pivotal roles. Here's an introduction to these tools and why you might consider them in your estate planning endeavors.
What are Totten Trusts?
A Totten trust, also known as a "bank account trust," is a revocable trust account created during the lifetime of a depositor. The primary characteristics of a Totten trust are:
Revocable Nature: The depositor (or grantor) has the right to change the terms of the trust, add or withdraw funds, or even close the account without informing or getting consent from the beneficiary.
Passing of Assets: Upon the death of the depositor, the funds in the account pass directly to the named beneficiary without going through probate.
Flexibility: The grantor retains control over the funds during their lifetime. It acts like any other bank account for the depositor, but has the added feature of naming a beneficiary for the eventuality of the grantor's passing.
What are POD Accounts?
POD (Payable On Death) accounts are similar in function to Totten trusts. They're bank or brokerage accounts where the account holders designate one or more persons to inherit the assets in the account upon their death. Key features include: