If you have ever opened a savings account in New York and the bank clerk asked you to fill in an "in trust for" line on the signature card, you have already created what New York law calls a Totten trust. It is one of the oldest, simplest, and most misunderstood estate planning tools available to New Yorkers. Clients come into my office holding a passbook or a printed statement showing an account titled "Jane Smith, in trust for John Smith," convinced that this single line of text has already handled their entire estate plan. Sometimes it has done exactly what they intended. Often it has not, and the gaps only surface after the depositor has passed away, when it is too late to fix them.
As an attorney who has spent my career helping New York families with wills, trusts, and probate matters, I want to walk you through what a Totten trust actually is, where it came from, how it is treated under New York law today, and where I most often see it go wrong.
The Origin: In re Totten and a Century of New York Law
The Totten trust takes its name from a 1904 decision of the New York Court of Appeals, In re Totten, 179 N.Y. 112 (1904). In that case, the court was asked to decide what happens when a depositor opens a bank account in his own name "in trust for" another person, but keeps full control of the money, makes deposits and withdrawals as he pleases, and never tells the named beneficiary about the account. The court held that this arrangement creates a valid, though tentative and revocable, trust. The depositor is treated as a trustee of the funds for the named beneficiary, but because the depositor retains complete control during life, the trust can be revoked at any time simply by withdrawing the money, closing the account, or changing the beneficiary. If the depositor dies without having revoked it, and funds remain in the account, the trust becomes absolute and the named beneficiary is entitled to whatever is left.
New York eventually codified this doctrine in statute. Today, the rules governing Totten trusts are found in the New York Estates, Powers and Trusts Law, specifically EPTL 7-5.1 through 7-5.9. These sections define what language creates a valid Totten trust account, confirm that it is revocable during the depositor's lifetime, address what happens if a beneficiary predeceases the depositor, and set out how the funds pass at death. Although many other states have adopted similar payable-on-death statutes, the concept is a genuinely New York invention, refined by our courts and legislature for more than 120 years.
How a Totten Trust Is Created
Unlike a living trust, a Totten trust requires no trust agreement, no attorney drafting, and no separate legal entity. It is created entirely through the way a bank or credit union account is titled. The depositor opens an account in their own name, adds the words "in trust for," "in trust for" abbreviated as "ITF," or sometimes "as trustee for" ("ATF"), followed by the name of a beneficiary. For example: "Mary Jones, in trust for Robert Jones." Under EPTL 7-5.1, this language, standing alone and without more, is sufficient to create a tentative trust of the type recognized in In re Totten.
Because the arrangement is created on a signature card rather than a lawyer-drafted document, it is inexpensive and can be set up in minutes at a bank branch. That convenience is exactly why it is so widely used, and also why it is so often set up incorrectly. I regularly see accounts where the beneficiary's name is misspelled, where two children are named on two different accounts without coordination with the rest of the estate plan, or where a beneficiary predeceased the depositor decades ago, leaving the account to pass through probate after all.
Key takeaway: A Totten trust is not a substitute for a will or a living trust. It is a beneficiary designation on a single bank account, revocable at any time, that transfers only the balance in that specific account at death. Every other asset you own still needs a plan.
Revocability During Life
The defining feature of a Totten trust, both under the 1904 case and under EPTL 7-5.2, is that it is revocable and entirely within the depositor's control while the depositor is alive. The named beneficiary has no present interest in the account. The depositor can:
- Withdraw all or part of the funds at any time for any reason
- Close the account entirely
- Change the named beneficiary without the current beneficiary's knowledge or consent
- Convert the account to a different form of ownership, such as a joint account or an individual account with no beneficiary designation
- Use the funds as collateral or pledge them, subject to the bank's own policies
Because the depositor retains this degree of control, courts and taxing authorities treat the funds as belonging entirely to the depositor during their lifetime. The named beneficiary's interest is described as "tentative" precisely because it can be wiped out at any moment before death. Only at the depositor's death, if the account still exists and still names that beneficiary, does the interest become absolute under EPTL 7-5.4.
How a Totten Trust Differs from a Living Trust
Clients frequently ask me whether an ITF account is the same as putting money into a revocable living trust. It is not, and the differences matter. A living trust, sometimes called an inter vivos trust, is created by a formal trust agreement that names a trustee, describes the trust's terms, and can hold virtually any kind of asset: real estate, brokerage accounts, business interests, and personal property, in addition to bank accounts. A properly funded living trust can include successor beneficiaries, staggered distributions, provisions for beneficiaries with special needs, and instructions for what happens if the grantor becomes incapacitated before death.
A Totten trust, by contrast, exists only with respect to the specific bank or credit union account on which it is designated. It has no written terms beyond the ITF designation itself, cannot hold real estate or other non-account assets, and offers no mechanism for managing the money if the depositor becomes incapacitated. If Mary Jones names Robert Jones as beneficiary on her savings account and then suffers a stroke that leaves her unable to manage her finances, the Totten trust designation does nothing to help; a power of attorney, or a properly funded living trust with a successor trustee, would be needed instead. For a broader look at how these tools work together, our wills and trusts practice page discusses when a living trust is the better fit for a family's full asset picture.
How a Totten Trust Differs from a POD Designation
Many banks today use the term "payable on death," or POD, instead of "in trust for." Functionally, under New York law, these are treated as equivalent tools for bank and credit union accounts: both are revocable, non-probate transfers created by the account's own titling, and EPTL 7-5.1 and related sections generally treat the ITF and POD designations the same way for savings accounts, checking accounts, and certificates of deposit. The main difference tends to be terminology and which financial institution's paperwork you are using; POD is more commonly seen on newer accounts and on brokerage or transfer-on-death (TOD) registrations for securities, while ITF has a longer historical association with New York's traditional savings banks. Whichever term your bank uses, the underlying legal analysis, revocability during life, passing outside probate at death, is essentially the same. Our guide to beneficiary designations in New York goes into more detail on how POD, TOD, and ITF designations interact with retirement accounts, life insurance, and the rest of your plan.
How a Totten Trust Interacts with Probate
One of the main reasons people use Totten trusts is to keep a specific account out of the probate estate. Under EPTL 7-5.4, when the depositor dies, ownership of the funds remaining in the account passes directly to the named beneficiary, not through the will and not through intestacy. In practice, the beneficiary brings a certified death certificate to the bank, and the bank releases the funds directly, often within days, without any need for Letters Testamentary or Letters of Administration from the Surrogate's Court.
That said, a Totten trust does not avoid every complication. If the named beneficiary predeceases the depositor and no new beneficiary was ever named, the funds revert to the depositor's estate and must pass through probate. If a will purports to leave "all of my bank accounts" to one child while an ITF designation on a specific account names a different child, the ITF designation generally controls for that account, which can create friction among family members who expected the will to govern everything. I often see similar confusion with jointly held accounts; our article on joint bank accounts and probate in New York covers related pitfalls where account titling silently overrides a will. For the bigger picture on what does and does not require Surrogate's Court involvement, see our overview on how to avoid probate in New York.
Creditor Claims Against Totten Trust Funds
Because the depositor retains full control during life, the funds remain fully exposed to the depositor's own creditors while alive, exactly as if no beneficiary designation existed. Revocability cuts both ways: the same control that lets a depositor change their mind lets a judgment creditor reach the account.
After death, New York law does not allow a Totten trust to place assets permanently beyond the reach of estate creditors. If the probate estate cannot cover valid debts, administration expenses, funeral costs, or estate taxes, the Surrogate's Court can require the Totten trust beneficiary to contribute funds back to help satisfy those obligations. A surviving spouse left less than the statutory elective share under EPTL 5-1.1-A may also reach Totten trust assets as part of that calculation. In short, a Totten trust changes who receives the money and how quickly, but it does not necessarily shield it from creditors or an elective share claim.
Medicaid Look-Back Implications
A mistake I see often, particularly among older clients concerned about long-term care costs, is the assumption that because a Totten trust is called a "trust," it will be treated like an irrevocable trust for Medicaid purposes and shielded from being counted as an available resource, or that funding one somehow starts the Medicaid look-back clock in the applicant's favor. Neither assumption is correct. Because the depositor can revoke the account and withdraw the funds at any time, New York's Department of Health and local Medicaid agencies treat Totten trust balances as fully countable resources belonging to the depositor, exactly like an ordinary savings account with no beneficiary designation. Adding an ITF designation does nothing to protect funds from Medicaid's asset limits, and it does not, by itself, trigger the kind of transfer that the five-year look-back period is designed to evaluate, since no completed transfer to another person occurs until death.
If Medicaid planning and asset protection are part of your goals, a Totten trust is the wrong tool for that specific job. Irrevocable Medicaid asset protection trusts, properly drafted and funded well in advance of a need for care, are a different and far more powerful instrument, and one that requires careful legal drafting rather than a line on a signature card.
Common Mistakes I See with Totten Trusts
- Forgetting to update the beneficiary. Bank signature cards are rarely revisited after a divorce, death, or estrangement. I have handled estates where the named ITF beneficiary was an ex-spouse or a sibling who had died twenty years earlier.
- Assuming it avoids estate tax. A Totten trust avoids probate, but the funds are still includable in the depositor's gross estate for New York and federal estate tax purposes if the total estate exceeds the applicable exclusion amount.
- Naming a beneficiary who is a minor. Banks will not release funds directly to a minor; a court-appointed guardian of the property is typically required, defeating much of the speed the ITF designation was meant to provide.
- Treating it as a complete estate plan. An ITF or POD account addresses one account only, saying nothing about your home, other assets, or who should make decisions if you become incapacitated. See our estate planning practice page for what a coordinated plan should include.
- Inconsistent titling across accounts. When some accounts are ITF to one child and others joint with another, while the will divides assets equally, the result is often an unintended distribution that only surfaces after death.
Getting It Right
A Totten trust can be a genuinely useful piece of a New York estate plan. It is inexpensive, easy to set up, and can move a specific account to a beneficiary quickly without the delay of Surrogate's Court proceedings. But it works best as one coordinated piece of a larger plan, not as a replacement for a will, a durable power of attorney, a health care proxy, or, where appropriate, a living trust. I have seen too many families discover, only after a loved one's death, that an outdated ITF designation or a conflict between a will and an account title created exactly the dispute and delay that proper planning is supposed to prevent.
Frequently Asked Questions
Is a Totten trust the same thing as a living trust?
No. A Totten trust is a simple beneficiary designation attached to a single bank or credit union account, created by naming a beneficiary "in trust for" on the signature card. A living trust (also called an inter vivos or revocable trust) is a separate legal entity created by a trust agreement that can hold many types of assets, real estate, investment accounts, and business interests, and that typically includes detailed instructions for incapacity and successive beneficiaries. A Totten trust has no trust document, no trustee duties beyond the depositor's own control of the funds, and no ability to manage assets other than the money in that one account.
Can I revoke or change a Totten trust in New York?
Yes. Under EPTL 7-5.2, a Totten trust is fully revocable during the depositor's lifetime. You can withdraw all the funds, close the account, change the named beneficiary, or convert the account to a different form of ownership at any time without the beneficiary's consent. The arrangement only becomes irrevocable, and the named beneficiary's interest only vests, at the depositor's death, and only if funds remain in the account at that time.
Do Totten trust funds avoid probate in New York?
Yes, in most cases. Because EPTL 7-5.4 provides that the balance remaining in an ITF account passes directly to the named beneficiary upon the depositor's death, the funds generally do not become part of the probate estate and are not distributed under the will or by intestacy. The beneficiary typically presents a death certificate to the bank to claim the funds. However, if the named beneficiary predeceases the depositor and no new beneficiary is named, the funds fall back into the depositor's probate estate.
Can creditors or Medicaid reach money in a Totten trust account?
During the depositor's lifetime, yes. Because the depositor retains full control and can revoke the arrangement at will, the funds are treated as the depositor's own assets and are fully countable for Medicaid eligibility purposes and fully reachable by the depositor's creditors. After death, New York's EPTL and SCPA allow a decedent's creditors, and in some cases a surviving spouse asserting a right of election, to reach Totten trust funds to the extent the probate estate is insufficient to satisfy valid claims, administration expenses, and estate taxes.
Should I use a Totten trust instead of a will or living trust?
A Totten trust can be a useful, low-cost tool for passing a specific bank account outside of probate, but it should not be your only estate planning document. It does not address real estate, personal property, incapacity planning, guardianship of minor children, tax planning, or contingent beneficiaries in the way a will or living trust can. Most clients benefit from combining ITF or POD accounts with a comprehensive will or revocable trust so that every asset, not just a single account, is properly directed.
