Totten trust

Totten trust

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.

Origin

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.

Totten trusts today

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.

References

* [http://law.enotes.com/everyday-law-encyclopedia/trusts Encyclopedia of Everyday Law] : Trusts


Wikimedia Foundation. 2010.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Totten trust — see trust Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. Totten trust …   Law dictionary

  • Totten trust — noun a savings account deposited by someone who makes themselves the trustee for a beneficiary and who controls it during their lifetime; afterward the balance is payable to the previously named beneficiary • Syn: ↑savings account trust, ↑savings …   Useful english dictionary

  • Totten trust — noun 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 settlors death, whatever is in that account will pass to a named beneficiary. Syn: Payable on Death …   Wiktionary

  • Totten Trust — A trust created by a bank deposit made by one person of his own money in his own name as trustee for another, such being a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some… …   Ballentine's law dictionary

  • Totten trust — /tot n/, Law. a trust created by opening a savings account in which the depositor is trustee for another, such trust being revocable at any time during the depositor s lifetime. * * * …   Universalium

  • trust — n 1 a: a fiduciary relationship in which one party holds legal title to another s property for the benefit of a party who holds equitable title to the property b: an entity resulting from the establishment of such a relationship see also… …   Law dictionary

  • Totten — may refer to:* Alex Totten, Scottish football player and manager * Charles Adelle Lewis Totten, (1851–1908), an American military officer, a professor of military tactics, a prolific writer, and an influential early advocate of British Israelism… …   Wikipedia

  • trust — A legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. The trustee holds a fiduciary responsibility to manage the trust s corpus assets and income for the… …   Black's law dictionary

  • trust account — noun a savings account deposited by someone who makes themselves the trustee for a beneficiary and who controls it during their lifetime; afterward the balance is payable to the previously named beneficiary • Syn: ↑savings account trust, ↑savings …   Useful english dictionary

  • Discretionary trust — Wills, trusts and estates …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”