totten trust
Noun: A Totten trust is a type of savings account established by a depositor who names themselves as the trustee for a named beneficiary. The depositor retains full control over the account, including the right to withdraw funds, during their lifetime. Upon the depositor's death, any remaining balance in the account passes directly to the named beneficiary without going through the probate process.
A Totten trust is used as a simple, informal method to transfer assets upon death. It functions as a "payable-on-death" (POD) arrangement for a bank account. - She set up a Totten trust for her granddaughter, ensuring the savings would be transferred easily. - The bank representative explained that a Totten trust avoids probate for the account funds.
- Legal Standing: While revocable at any time by the depositor, a Totten trust is generally considered an incomplete gift until the depositor's death, at which point it becomes irrevocable.
- Contrast with Formal Trusts: Unlike a formal living trust, a Totten trust is not a separate legal entity and typically only applies to the specific bank account where it is established.
- Payable-on-Death (POD) Account: A more modern and common term for the same basic arrangement as a Totten trust.
- Trust Account: A broader term for any account held in a fiduciary capacity, which includes but is not limited to Totten trusts.
- Revocable Trust: A category of trusts that can be altered or terminated by the grantor, which includes Totten trusts.
- Savings Account Trust
- Tentative Trust (an older, less common synonym)
- "In trust for" (ITF): The standard phrasing used on the account title, e.g., "John Doe, in trust for Jane Doe."
- "As trustee for" (ATF): Alternative phrasing with the same legal effect as ITF.
- 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
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