Duhaime's Law Dictionary

Totten Trust Definition:

Money placed in a bank account with the instruction that upon the settler's death, whatever is in that bank account will pass to a named beneficiary.

Nemed after the 1904 New York case in which the estate tool was recognized, In Re Totten:

"A deposit by one person of his own money in his own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the passbook or notice to the beneficiary. In case the depositor dies before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor."

In Johnson v La Grange State Bank, Justice Ryan of the Supreme Court of Illinois wrote:

"A Totten trust, in effect, purports to change ownership of the deposited funds to the designated beneficiaries upon the death of the settlor.

"The requirements for their establishment are very informal. The enjoyment of the beneficiaries is provisional and tentative, since there are no limitations or qualifications on the ability of the settlor to withdraw funds from the account. Inevitably, a great deal of control and ownership is reserved to the settlor over the funds."

In Pecore, Canada's Supreme Court offered to posterity this description of the trust tool of their Southern neighbour:

"The Totten trust (sometimes referred to as the Bank account trust) is now recognized as valid in most states in the United States; an individual places money in a bank account with the instruction that upon his or her death, whatever is in that bank account will pass to a named beneficiary.

"The Totten trust is so named for the leading case establishing its validity. While a Totten trust does not deal with joint accounts as such, it recognizes the practicality of the depositor having control of an account during his or her lifetime but allowing the depositor’s named beneficiary of that account to claim the funds remaining in the account upon the death of the depositor without the disposition being treated as testamentary."


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