Totten Trust in New York: Revocation, Beneficiaries, and Payout

A Totten trust in New York is a bank account you open in your own name “as trustee for” someone else; you keep complete control of the money while you live, and whatever balance remains when you die passes directly to the named beneficiary without going through probate. The arrangement is governed by Estates, Powers and Trusts Law (EPTL) Article 7, Part 5, and it is sometimes called a payable-on-death account or a “poor man’s trust” because setting one up takes a single trip to the bank.¹

What a Totten Trust Can and Cannot Hold

EPTL 7-5.1 defines a trust account as a savings, share, certificate, or deposit account at a bank, trust company, savings bank, credit union, or federal savings association where the depositor is listed as trustee for another person.² Accounts created under a formal trust instrument, a will, or a court order are excluded; those follow different rules.

The tool is limited to cash on deposit. You cannot use a Totten trust to pass real estate, a brokerage account, a car, or a retirement account. For anything beyond bank deposits, you need other instruments: a formal revocable trust, transfer-on-death registration for securities, or beneficiary designations on retirement accounts.

During your lifetime, no legal interest passes to the beneficiary. You can deposit, withdraw, earn interest, and close the account without asking the beneficiary and without telling them the account exists.³ The account uses your Social Security number, interest is reported on your personal return, and no separate fiduciary tax filing is required.

Opening the Account

Go to a qualifying New York financial institution and ask to open a trust account. The account title has to show you are acting as trustee, usually written as “John Smith as trustee for Jane Smith” or “John Smith in trust for Jane Smith” (often abbreviated ITF). That titling language is what makes the deposit a Totten trust under EPTL 7-5.1.²

You will sign a signature card that functions as the governing agreement. Bring the beneficiary’s full legal name; the bank will likely ask for the beneficiary’s Social Security number and address to meet federal reporting rules. Once the account is funded, check that your statements show the trust designation. Those bank records are the primary evidence a court will look at if the trust is later questioned.

There is no statutory minimum deposit beyond whatever the bank itself requires.

Changing Your Mind: Four Ways to Revoke

Flexibility is the point. EPTL 7-5.2 gives you three ways to revoke or modify the trust during your lifetime, and divorce triggers a fourth automatically.³

Withdraw the Money

Taking the balance down to zero ends the trust because nothing is left to pass. One point that trips people up: if you later deposit new money without re-establishing the trust language, the former beneficiary has no claim to the new funds. The trust reaches only what is actually in the account.

File a Notarized Notice With the Bank

To keep the money in place but change the beneficiary, or to cancel the trust while retaining the account, you need a written notice that names the beneficiary and the financial institution. The statute requires the document to be acknowledged the way a real estate deed would be, meaning signed before a notary. You then file the notice with the bank during your lifetime. A notarized notice left in a drawer accomplishes nothing.³

Revoke in Your Will

You can also revoke or modify a Totten trust through your will, but New York’s requirements are strict. The will must contain an express direction about the trust account and must identify both the beneficiary and the financial institution. A general residuary clause leaving “the rest of my estate” to someone does not reach the account; the court will ignore it and the named beneficiary keeps the money.³

If you hold several trust accounts for the same beneficiary at the same institution, a will provision that meets the basic requirements revokes all of them unless you limit the direction to specific account numbers. The revocation can use explicit language (“I revoke the trust”) or take the form of a specific bequest of the account to someone other than the named beneficiary.

Divorce Revokes It Automatically

Under EPTL 5-1.4, when a divorce or annulment becomes final, any beneficiary designation naming your former spouse in a Totten trust is automatically revoked.⁴ The statute lists “bank account in trust form” and “totten trust account” among the covered instruments. The law treats the former spouse as having predeceased you, so any contingent beneficiary or default rule takes over. Remarrying the same person reinstates the original designation.

Do not rely on this automatic rule alone. If the bank has not been told about the divorce and pays the ex-spouse, recovering those funds requires a separate court proceeding. Update the account yourself after a divorce.

When the Beneficiary Dies First

If the named beneficiary dies before you do, the trust terminates under EPTL 7-5.2(3), and the funds remain yours free of any trust obligation.³ The beneficiary’s own heirs get nothing from the account. If you do not name a replacement, the balance falls into your probate estate at your death, which pulls your family into Surrogate’s Court for money that could have transferred directly with a short visit to the bank.

Naming More Than One Beneficiary

You can name multiple beneficiaries. Under EPTL 7-5.7, funds pass to them in equal shares unless the trust terms say otherwise, and if one beneficiary predeceases you, the surviving beneficiaries absorb that share in equal proportions.⁵ If you want an unequal split, or if you want a deceased beneficiary’s share to go to that person’s own children rather than to the surviving beneficiaries, you have to build those instructions into the account terms at the bank. The default is equal division, and nothing more.

Collecting the Money After the Depositor Dies

EPTL 7-5.2(4) provides that when the depositor dies and the beneficiary survives, the trust terminates and the funds belong to the beneficiary outright.³ To claim the money, the beneficiary brings a certified copy of the death certificate and government-issued identification to the bank. Most institutions release the funds within a few business days once the paperwork checks out.

The transfer bypasses Surrogate’s Court entirely for that balance, which avoids the probate filing fees that otherwise scale with estate size (from $45 for estates under $10,000 up to $1,250 for estates of $500,000 or more).⁶

If the Beneficiary Is a Minor

EPTL 7-5.3 draws a line at $10,000. If the account balance is $10,000 or less, the bank can pay the funds to the minor’s parent or parents, who hold the money for the child. If the balance exceeds $10,000, the bank can only release the funds to a court-appointed guardian of the minor’s property.⁷ Getting a guardian appointed means a Surrogate’s Court proceeding, which is exactly the result most Totten trust depositors are trying to avoid. If you plan to name a child and the account will hold more than $10,000, a formal trust with a named trustee may serve better.

FDIC Insurance on Trust Accounts

Totten trusts qualify as revocable trust accounts for FDIC insurance. Each named beneficiary adds $250,000 of coverage: the formula is number of owners times number of distinct beneficiaries times $250,000, capped at $1,250,000 per owner across all trust accounts at the same institution.⁸ Three beneficiaries at one bank gets you up to $750,000 of coverage; five or more hits the ceiling. For larger balances, naming additional beneficiaries or spreading funds across different banks are the usual ways to stay insured.

Taxes

During your lifetime, a Totten trust creates no separate tax obligation. The IRS treats the account as yours because you can revoke it at any time, so interest and dividends flow through to your personal return and no fiduciary filing is needed.

Funding the account is not a taxable gift, since you have not given anything away while you retain the power to pull the money back. The gift, for tax purposes, happens at death.⁹

At death, the full balance counts in your taxable estate. The 2026 federal estate tax exemption is $15,000,000 per individual, so most depositors owe no federal estate tax on these accounts.¹⁰ New York’s threshold is lower: the basic exclusion amount for 2026 is $7,350,000.¹¹ New York also has a “cliff” feature, meaning that if the total estate exceeds 105% of the exclusion amount, the whole estate becomes taxable from the first dollar rather than just the excess. For estates near that threshold, a Totten trust balance can push the total over.

Where a Totten Trust Is the Wrong Tool

Because the depositor keeps full control, the entire balance counts as an available resource for means-tested benefits. The SSI resource limit is $2,000 for an individual and $3,000 for a couple, and any meaningful Totten trust balance will put the depositor over the limit and off benefits.¹² Medicaid treats the account the same way: because the trust is revocable, the funds are considered available to the applicant and are counted toward the asset limit. A Totten trust does not shield assets from Medicaid, despite a common assumption that any trust does. If long-term care planning or benefit eligibility is on the table, talk to an elder law attorney about tools built for that purpose.

A Totten trust also does nothing for incapacity. The beneficiary has no access during your lifetime, and the bank will not release funds to your family without a power of attorney or court-appointed guardian. If incapacity is part of what you are planning for, a formal revocable trust with a named successor trustee provides what a Totten trust cannot.

Creditors are the final piece. New York does not shield Totten trust funds from the depositor’s debts simply because the account carries a beneficiary designation. If the probate estate lacks assets to pay valid claims, creditors can reach the trust balance.

1
New York State Courts. Matter of Totten
2
New York State Senate. New York Estates Powers and Trusts Law 7-5.1 – Definitions
3
New York State Senate. New York Estates Powers and Trusts Law 7-5.2 – Terms of a Trust Account
4
New York State Senate. New York Estates Powers and Trusts Law 5-1.4
5
New York State Senate. New York Estates Powers and Trusts Law 7-5.7 – Multiple Beneficiaries
6
New York State Senate. New York Surrogate’s Court Procedure Act 2402
7
New York State Senate. New York Estates Powers and Trusts Law 7-5.3 – Payment to Beneficiary
8
FDIC. Deposit Insurance At A Glance
9
Internal Revenue Service. Gifts and Inheritances
10
Internal Revenue Service. What’s New – Estate and Gift Tax
11
New York Department of Taxation and Finance. Estate Tax
12
Social Security Administration. Understanding Supplemental Security Income SSI Resources