Is a Totten Trust the Same as a POD Account?
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Thinking about what happens to your money after death is uncomfortable, but ignoring it can leave your family with delays and paperwork at a difficult time. If you only want to pass on cash held in bank accounts, there is a simple option many people overlook. It is often called a Totten trust, though your bank may label it differently. The core idea is straightforward — you name a beneficiary on your bank account, and that person gets the money directly after your death, without probate.
Despite the confusing names, a Totten trust and a payable-on-death or POD account are essentially the same thing. They are not complex trusts or legal structures. They are regular bank accounts with one extra instruction attached to them. That small detail can make a big difference in how smoothly your money reaches your loved ones.
One Concept, Different Names
A Totten trust is the legal term that came from a 1904 New York court case. Over time, banks began using clearer, more descriptive language. Today, most people see these accounts labeled as payable-on-death or sometimes “in trust for,” often shortened to ITF. While the names sound different, they all point to the same setup.
In simple terms, this is a savings account where you list a beneficiary. During your lifetime, nothing really changes. You own the account, control the money and use it as you always have. The beneficiary has no rights to the funds while you are alive.
How Totten Trust Actually Works
The mechanics are easy to understand. You open a bank account or update an existing one and name a beneficiary. That is it. You can deposit money, withdraw it or close the account whenever you want. You can also change the beneficiary at any time if your circumstances change.
The key moment comes after your death. At that point, the beneficiary can go to the bank, provide the required documents and claim the funds. The money does not become part of your probate estate. It moves directly from the account to the person you named.
Why Probate Avoidance Matters
Probate is the process of settling an estate under court supervision. Assets are identified, debts are paid and whatever remains is distributed according to a will. For small estates, this may not be a major burden. Many states offer simplified probate procedures when the settlement amounts are low.
For larger estates, probate can be slow and frustrating. It can take months, sometimes years, to complete. It also removes privacy, since court filings become part of the public record. A Totten trust avoids all of this for the money in that account. Because a beneficiary is already named, the bank does not need to wait for court approval.
Control Stays With You
One of the biggest advantages of a Totten trust is that it does not limit you while you are alive. Unlike some formal trust arrangements, there is no loss of control. You do not need a lawyer to manage it, and you do not need to file separate trust documents.
The account is also fully revocable. If relationships change or you rethink your plans, you can update the beneficiary just as easily as you named one in the first place.
Limitations of Totten Trust
The simplicity of a Totten trust is also its main limitation. It only works for cash held in bank accounts. You cannot use it to pass on a house, a car, jewelry or even investment accounts like stocks and bonds.
It also does not help if you become incapacitated. If you are alive but unable to manage your finances, a Totten trust offers no instructions for who steps in. In that situation, other planning tools may be necessary.
Bottom Line
A Totten trust, a payable-on-death account and an in-trust-for account are just different names for the same idea. It is a simple, low-effort way to ensure that money in a bank account goes directly to a chosen person after your death, without probate delays.
If cash is the only asset you want to pass on this way, it can be an effective solution. If your estate includes property and investments, you may need broader planning. Either way, understanding how these accounts work can help you make a cleaner plan for the people you leave behind.