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Totten trust |
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| Wills, trusts and estates |
| Part of the common law series |
| Wills |
| Wills (legal history) Joint wills and mutual wills Will contract · Codicil Holographic will · Oral will |
| Sections Attestation clause Residuary clause Incorporation by reference |
| Contest Testamentary capacity Undue influence Insane delusion · Fraud |
| Property disposition Lapse and anti-lapse Ademption · Abatement Elective share Pretermitted heir |
| Trusts |
| Express · Constructive Resulting |
| Common types Bare · Discretionary Accumulation and Maintenance Interest in possession Charitable · Purpose · Incentive |
| Other types Protective · Spendthrift Life insurance · Remainder Life interest Reversionary interest Honorary · Asset-protection |
| Governing doctrines Pour-over will Cy-près doctrine |
| Estate administration |
| Intestacy · Testator · Probate Power of appointment Simultaneous death · Slayer rule Disclaimer of interest · Inheritance tax |
| Related topics |
| Totten trust |
| Other common law areas |
| Contract · Tort · Property Criminal law · Evidence |
A Totten trust (also referred to as a "Payable on Death" account) is a form of trust created where one party (the settlor of the trust) places money in a bank account or security with instructions that upon the settlor's death, whatever is in that account will pass to a named beneficiary. For example, a Totten trust arises where the account is titled in the form "[depositor], in trust for [beneficiary]". It is not a legal trust, but arises out of equity, as a matter of fairness.
The name is derived from Matter of Totten, 179 N.Y. 112 (1904), the case decided by the Court of Appeals of New York which established the legality of this practice. Although this method of creating a trust did not meet the formal requirements of trust creation, or the testamentary formalities required to make a valid will, the Court noted that such an arrangement typically involved a small amount of money left by a person of modest means, who could not otherwise afford to establish a legal mechanism for passing the specified property. For this reason, the device is sometimes called a "poor man's will". The funds in question are not subject to probate and, if held in a bank account, are insured in the same manner as any deposit. The beneficiary has no access to the account until the depositor's death and need not be notified that the account exists. This is also called a tentative trust because it is contingent upon the death of the settlor or creator of the trust account.
Most U.S. States now recognize the validity of Totten trusts. The Restatement 3d of Trusts Section 26 and the Restatement 3d of Property (Section 7.1 comment i) also recognize its validity. Such a device can be revoked at any time by the settlor, either by closing the account or by executing a will which disposes of the property in the account. The funds in the account can be reached by the creditors of the settlor during the settlor's life. If the intended beneficiary predeceases the settlor, then the gift will lapse, and will generally not be saved by an anti-lapse statute.
Totten trusts can only be created with certain types of depository accounts or securities; in particular they can not be used to convey real property.
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