Matter of Estate of Totten, 269 N.E.2d 712 (N.Y. 1971)

A Totten Trust, a bank account held in trust for another, is presumed to be an absolute trust if the depositor dies before the beneficiary without revocation; this presumption can be overcome by a will manifesting a clear intention to revoke the trust, but general language bequeathing all funds on deposit is insufficient if other factors indicate a contrary intention.

Summary

The New York Court of Appeals addressed whether a will’s general bequest of all funds on deposit was sufficient to revoke four Totten Trusts established by the testatrix. The Surrogate’s Court held that the will did revoke the trusts. The Appellate Division affirmed. The Court of Appeals reversed, holding that the will’s language, in the context of the entire estate and surrounding circumstances, was insufficient to overcome the presumption that the Totten Trusts were not revoked. The court emphasized the need to scrutinize the will as a whole and the surrounding circumstances to determine the testatrix’s true intention, particularly when the will’s language is not explicitly clear.

Facts

The testatrix had six separate bank accounts: four in Totten Trust form for the benefit of others, and two in her name alone. Her will contained a clause that stated: “I give and bequeath any and all funds on deposit to my credit, in any bank or trust company or similar financial institution.” The funds in the Totten Trust accounts represented slightly more than one-third of the total estate. The testatrix continued to have interest posted to the trust accounts until her death.

Procedural History

The Surrogate’s Court initially determined that the will’s language revoked the Totten Trusts. The Appellate Division affirmed this decision, finding the will’s language to be a clear expression of intent to revoke the trusts. The New York Court of Appeals reversed the Appellate Division’s order, remitting the case to the Surrogate’s Court for further proceedings.

Issue(s)

Whether the general language in the testatrix’s will, bequeathing “any and all funds on deposit to my credit,” was sufficient to overcome the presumption that the Totten Trusts, established by the testatrix, were not revoked before her death.

Holding

No, because the language in the will, considered in the context of the testatrix’s entire estate and surrounding circumstances, was insufficient to demonstrate a clear intention to revoke the Totten Trusts.

Court’s Reasoning

The court began by reiterating the presumption that a Totten Trust becomes an absolute trust upon the depositor’s death if no revocation or disaffirmance has occurred. While this presumption can be overcome by a will demonstrating a clear intention to revoke, the court found the will’s language in this case insufficient. The court reasoned that the will’s general language, bequeathing all funds on deposit, did not explicitly mention or disaffirm the Totten Trusts. Crucially, the court noted that the trust accounts did not comprise the majority of the estate’s assets, and the testatrix maintained other bank accounts in her own name. These factors suggested that the will’s language was not necessarily intended to encompass the Totten Trust accounts. The court also pointed to the fact that interest continued to be posted to the trust accounts up to the date of death, and a clause in the will contemplated “property passing outside [the] Will,” both indicating an intention not to revoke. The court emphasized the importance of examining the surrounding circumstances and the will as a whole to ascertain the testatrix’s true intention. The court quoted Matter of Totten (179 N. Y. 112, 126): “In case the depositor [of a Totten Trust] dies before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor.” The court concluded that the will’s language, in itself, was not enough to overcome this presumption, requiring a deeper scrutiny of the surrounding circumstances to determine the testatrix’s true intent.