What defines a valid Totten trust?

A valid Totten trust, often referred to as a "tentative trust," is characterized by its allowance for asset control until the death of the grantor. This type of trust permits the person who created it to retain full control and access to the assets during their lifetime, without formally transferring them to the trust until death. The assets are usually held in a bank account in the grantor's name, with instructions for distribution upon their passing.

The option mentioning formal trust documentation is incorrect in this context, as a Totten trust does not require extensive legal formalities; it can be established simply by depositing funds into a trust account and designating beneficiaries. Additionally, a Totten trust does not necessarily exclude financial institutions; it typically involves them since the trust is often created through a bank account. Furthermore, a Totten trust does not need to include multiple beneficiaries; it can be set up with just one beneficiary if the grantor chooses to do so. Thus, the core defining feature of a Totten trust is the grantor's ability to maintain control of the assets until death, making option B the correct choice.