Totten Trusts

A Totten Trust is an informal trust which arises where a person, known as a “settlor,” establishes bank trust accounts or security for another person who is referred to as the “beneficiary.”

What is a Totten Trust?

This type of trust is also known as a “Payable On Death” or a “transfer on death” account.  The account usually contains the settlor’s name and the designation that the account is “held in trust for John Doe.”  Also, there can be a co-trustee. Upon the death of the settlor, the account automatically becomes the beneficiary’s property. The totten trust can be revoked at any time by the settlor.  The settlor can simply close the bank account, spend all of the money in the account or execute a will which includes the disposition of the bank account.  In addition, creditors may reach the funds in the account to satisfy the debts of the settlor.  Moreover, if the beneficiary dies before the settlor, the totten trust will lapse.


There are some disadvantages of the totten trust.  Initially, the bank will allow one beneficiary to the account. Thus, there is no alternative individual listed on the account.  In addition, if the beneficiary is a minor, a guardian may have to be appointed if the settlor dies before the beneficiary attains the age of majority.  Also, some states require that an estate tax be paid on the account prior to the availability of the funds to the beneficiary.

Legal Help

The totten trust is not part of every estate plan; thus, when creating your own estate plan, an experienced estate planning attorney can assist you in drafting an estate plan tailored to your individual needs and interests, which may or may not include the use of a totten trust.