What type of arrangement allows a bank account to pass to a designated person upon the owner's death?

The correct answer is the arrangement that utilizes pay-on-death designations. This type of designation allows the account holder to specify a beneficiary who will receive the funds directly upon the owner's death, bypassing the probate process. This means that when the owner passes away, the designated person automatically receives the money in the account without the need for legal proceedings to transfer ownership.

Payable on death designations are straightforward and often simpler than joint accounts, as the original owner remains the sole account holder and maintains full control during their lifetime. This aspect preserves the benefits of ownership and ensures that the funds directly go to the chosen individual without being tied up in probate.

Other arrangements mentioned may serve different purposes or operate under different mechanisms. For example, joint tenancy involves co-ownership and rights of survivorship, while life estate arrangements pertain to real property and the rights of individuals during their lifetime. Totten trusts, on the other hand, are essentially a type of bank account trust that allows for a payable on death benefit but requires specific legal setup, which makes them more complex than simple payable on death designations.