Wills 10 : Totten Trust

Q: In Father’s will, he left Mother one dollar.  The remainder was left to my childless brother, now deceased, and me.  Mother elected against Father’s will and then settled with his estate – agreeing (a) to accept twelve percent of the estate in full settlement of all her claims and (b) to leave “intact and without change” her own Last Will and Testament.  In Mother’s settlement agreement, the lawyers made no mention of Totten trusts, trust accounts, inter vivos transfers or gifts.

Mother’s own will bequeaths a sum of money to the church and to a friend – with the residue and remainder to us two children, or to her grandchildren per stirpes in the event we predecease her.

Now, Mother has left this world, too.  It turns out that, after the signing of the settlement agreement, she opened several Totten trusts in trust for various charities.  I say that these Totten trusts violate the spirit, if not the letter, of the agreement: they are invalid.

A: A Totten trust is also known as a ‘payable on death’ account.  Your mother placed money in a bank account with instructions that, upon her death, the balance should pass to the charity.  These funds are not subject to probate.

Given that the agreement itself is silent as to Totten trusts, and that only a change of your mother’s will is forbidden, it is extremely unlikely that a court will ‘read-in’ a prohibition against Totten trusts.  No court will squeeze out, from a mere no-change-in-will promise, a host of other pledges.

Despite this settlement agreement, during her lifetime, your mother could spend her money as she wished: it is not so outrageous that she saved it as she wished.  When drawing up the settlement agreement, your attorney should have indicated that, essentially, a truck could be driven through it.  Even if he or she did not, you cannot rely upon a court to clean up this kind of a mess, if such it be.

By: Scott Baron,
Attorney at Law Advertorial

The law responds to changed conditions; exceptions and variations abound. Here, the information is general; always seek out competent counsel. This article shall not be construed as legal advice.

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