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What Is A Totten Trust?

In simple terms, a Totten Trust is basically a bank account with a named beneficiary. It comes into existence when a bank account is in the name of designated beneficiary, on behalf of the depositor. The beneficiary does not need to know that the account exists. If they do, they do not have access until the depositor’s death regardless. Any person, business or charity can serve as beneficiaries on this trust.  

This type of trust has different names and has been called many things. Totten Trusts are often called or referred to as “POD”, “ITF”, or “ATF” — “Payable Upon Death”, “In-Trust-For”, or “As Trustee For”. It has also been called a “tentative trust” since it is contingent on the death of the creator of the account. This type of trust is typically for someone with modest means who does not have a lot to pass on to their beneficiaries. The funds in this account are not subjected to probate as well. This is a huge plus when the assets are low to start with.  

How To Create A Totten Trust

In order to create a Totten Trust, you should know what they are and who they are typically for. With this understanding, you can see if this will serve your purpose or if a different type of trust would be necessary. 

Why Is It Called A Totten Trust?

The name “Totten Trust” stems from a case in 1904 that was decided by the New York Court of Appeals — “Matter of Totten – 179 N.Y. 112” — in which it is established that this form of transferring assets was legal. The initial New York ruling referred to these types of accounts as revocable trusts, but they eventually became known as Totten Trusts. Up until the court case, similar lawsuits stated that such accounts were essentially attempts to form a will without going through the normal legal process that wills and trusts require.  

Who Are Totten Trusts For?

The court ruled that this method of creating a trust did not formally meet the requirements for a trust. However, the arrangement typically involved small amounts of money left by someone with a relatively low net worth who could not afford to establish a will or trust for passing their assets. This was deemed as acceptable in these types of situations. Totten Trusts are sometimes referred to as a “poor man’s will” because of this very reason — someone who has little to pass and does not have the resources to create a trust or will. 

How Is It Created?

As stated by the FDIC, a Totten Trust is created when the account owner signs an agreement with the IDI (Insured Depository Institution) to transfer the funds into the account to one or more beneficiaries upon the creator of the account’s death. A regular checking or savings account can be turned into a Totten Trust, the owner of the account just needs to fill out the necessary paperwork and name a beneficiary. These are popular in association with CDs, bank accounts, security accounts at a brokerage, or a piece of real estate property (but not the whole property itself).

Pros and Cons Of A Totten Trust

A Totten Trust can be useful for someone who has somewhat of a low net worth and wants to avoid probate court costs. This can limit the use cases for this type of trust, as certain assets cannot be passed through this. 

Pros of A Totten Trust

If you wish to provide your beneficiaries with assets straight away. If you have no desire to have the courts be involved — a Totten Trust may be for you. The main pros are:


  • You can avoid the probate process and associated fees. This is known as a “testamentary substitute” so that assets don’t have to go through probate courts
  • The funds in your account goes directly to beneficiaries (whom had no rights to the funds until the depositors death)

Cons of A Totten Trust

Totten Trusts have their limitations, which inhibits their ability to be used more often. The trust is used when someone has low amounts of assets to pass, and can only include certain assets. The main cons are:


  • Can only be used to pass along certain types of depository accounts or securities
  • Cash is the only thing that can be passed through a Totten Trust
  • Cannot be used to pass along real estate or other properties 

Final Thoughts: Start Planning Your Estate

A Totten Trust is commonly used by someone with a lower net worth. Someone with a bank account that they want passed along without probate interference could also use this trust. Upon your death, your assets in the account will be provided to your beneficiaries without any fees. 

This seems relatively cut and dry. However, you may have some concerns about what can be included or if there are limits, etc. It could be in your best interest to have a financial advisor professionally review your financial situation. This way you would know if a Totten Trust would work for you.