Totten Trust (a trust-like alternative)

Question 1

What is a Totten Trust?

Answer 1

• bank account trust
• a bank account in the depositor’s name “as trustee for” a named beneficiary
• Depositor makes deposits and withdrawals as she wishes during her lifetime
• Beneficiary has no beneficial interest during the depositor’s lifetime, but gets whatever is in the account when the depositor dies

Question 2

4 Ways to Revoke a Totten Trust Account

Answer 2

1- withdraw all the money
2- express revocation during lifetime by depositor making a writing naming the old beneficiary AND having the revocation notarized AND delivered to the bank
3- Revocation in a will by making an express reference to the account, including the name of the beneficiary and the name of the new beneficiary and the name of the bank
4- death of beneficiary before the depositor

Question 3

Changing the beneficiary

Answer 3

can be made by a depositor BUT must be done via a notarized statement sent to the financial institution naming the old beneficiary and the new one

Question 4

Protection from creditors?

Answer 4

NO!
Creditors of the depositor can ALWAYS reach the account balance, EITHER before OR after the depositor’s death, since it is a form of revocable trust revoked partially each time a withdrawal is made