Green died intestate. He was survived by his wife Hilda, and three
kids from a prior marriage.
Turns out, most of Green's
estate was held in Totten trusts
and designed to go to his three kids. Out of the $258k estate, Hilda only
received $27k. The rest went to Green's kids.
Totten trusts are a form of trust created where one party
(the settlor of the trust) places money in a bank account or security
with instructions that upon the settlor's death, whatever is in that account will pass
to a named beneficiary.
Technically that's not a
trust, it's just a payable-upon-death account. But courts have held that they are equitable
trusts.
One the elements of a
valid trust is purpose. Trusts need to have a purpose, like "to
provide for education" to be valid.
They are called Totten
trusts because the first case to
uphold them involved a guy named Totten.
Hilda sued, seeking a widow's
allowance and recovery of all the money distributed from the trusts.
The Probate Court found that
the Totten trusts were valid and
upheld the decision to give the assets to the kids. Hilda appealed.
The Appellate Court affirmed
in part. Hilda appealed.
The Appellate Court found
that the Totten trusts were valid,
but also that Hilda was entitled to $10k as part of a widow's allowance.
The Rhode Island Supreme Court
affirmed the validity of the trusts.
The Rhode Island Supreme
Court found that in order to be a valid Totten trust there must be clear and convincing
evidence on the part of the settlor to create a trust.
Green showed intent by
putting his kids names on the accounts as beneficiaries, but also by
making statements to one of his kids.
Just putting someone's name
on an account does not automatically meet the standard for showing
intent. There must be more.
Hilda tried to rebut the
presumption by showing that all the kids didn't know about all the
trusts, but that didn't sway the Court.
The Uniform Probate Code
§ 6-201(8) allows for Totten trusts,
but instead calls them payable-upon-death accounts. They are also sometimes called tentative
trusts or savings account
trusts.
Totten trusts are solely the property of the settlor as long as the settlor lives, and are fully revocable. However, upon
the death of the settlor the
trust becomes irrevocably the property of the beneficiary.
As a surviving spouse, Hilda
could always take an elective share
of the augmented estate as
an election.
That could be up to $50k
plus 50%, under the current Uniform Probate Code.
