TN 154 (01-20)

GN 02402.060 Direct Deposit to Trust Accounts

A. Description of Totten trusts and similar accounts

A Totten trust (also called a bank-account trust) is a tentative trust in which a grantor (depositor) makes himself or herself the trustee of his or her own funds for the benefit of another (the trust beneficiary). Typically, the following are characteristics of Totten trust accounts and accounts similar to Totten trusts:

  1. 1. 

    Grantor deposits funds into a savings account and indicates, either by the account titling — for example, the account may have the phrase “in trust for” in the title — or by filing a writing with the bank, that the grantor is the trustee of the account for another person.

  2. 2. 

    Grantor may revoke a Totten trust at any time.

  3. 3. 

    Grantor names a trust beneficiary to inherit the funds in the account upon the grantor’s death.

  4. 4. 

    Ownership of the trust principal (the funds in the account) passes to the trust beneficiary upon the grantor’s death.

Totten trusts are valid in most jurisdictions, but other jurisdictions have held them invalid because they are too tentative. In particular, they generally lack formal requirements and do not state a trust intent or purpose.

B. Policy for direct deposit to Totten trusts or similar accounts

Direct deposit of a beneficiary’s or recipient’s benefits into a Totten trust or accounts similar to Totten trusts, as described in Part A of this section, does not constitute an assignment of benefits because the depositor (grantor) retains legal ownership and control of the benefits after they are deposited into the account. Therefore, direct deposit into this kind of account may be approved.

C. Policy for direct deposit to other trusts or trust accounts

Direct deposit of a beneficiary’s or recipient’s benefits into a trust or trust account that does not fit the description in Part A of this section usually will constitute an assignment of benefits because the grantor — whose benefits are at issue — usually does not retain legal ownership and control of the benefits after they are deposited into the trust or trust account. Most importantly, the grantor usually is not the trustee.

Therefore, direct deposit into a trust or trust account — other than a Totten trust or similar account that fits the description in Part A of this section — generally may not be approved. Consult with your regional trust lead, as appropriate, for an evaluation of the trust or (trust) account at issue.

For more information about assignment of benefits, refer to SI 01120.200G or SI 01120.201J.

D. Titling examples for Totten trusts and similar accounts and other types of trusts

The way an account is titled usually reflects the nature of the account and thus usually provides a helpful indication of whether an account is a Totten trust or similar account (direct deposit of benefits permitted), on one hand, or another kind of trust or trust account (direct deposit of benefits generally not permitted), on the other.

EXAMPLES: Titling of Totten trusts and similar accounts

  • Totten Trust Account Title (Direct Deposit Permitted)- “Sean Johnson in trust for April Johnson”

  • Totten Trust Account Title (Direct Deposit Permitted)- “Sean Johnson payable upon death for April Johnson”

EXAMPLES: Titling of other types of trusts and trust accounts

  • Trust Title (Direct Deposit Not Permitted)- “The Sean Johnson Special Needs Trust”

  • Trust Title (Direct Deposit Not Permitted)- “The Sean Johnson Irrevocable Trust”

  • Trust Title (Direct Deposit Not Permitted)- “The Sean Johnson Counties Pooled Trust”

  • Trust Title (Direct Deposit Not Permitted)- “The Sean Johnson Community Master Trust Agreement”

NOTE: The titling of an account is not necessarily the determining factor of whether the account constitutes a Totten trust.

E. References

  • SI 01120.200 Trusts-General, Including Trusts Established Prior to 1/1/00, Trusts Established with the Assets of Third Parties and Trusts Not Subject to Section 1613(e) of the Social Security Act

  • SI 01120.201 Trusts established with the assets of an individual on or after 1/1/00

  • GN 00602.075 Transfer of Benefits to a Trust


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0202402060
GN 02402.060 - Direct Deposit to Trust Accounts - 09/22/1998
Batch run: 01/29/2024
Rev:09/22/1998