Q: You've written that in New York, a will can override the beneficiary designation on an 'in trust for' bank account, sometimes called a Totten trust. Every bank has told me that this is not true. They say that the `in trust for' arrangement overrides the will. Please clear that up for me. -- TR via email
A: For legal advice, consult a lawyer, not a bank!
The banks are right that in general, a beneficiary designation overrides a will. Most accounts with a named beneficiary, such as retirement accounts and insurance policies, go to that beneficiary no matter what your will says.
But in Totten trusts, commonly known as bank `in trust for' accounts, are an exception to that rule, says Eric Kramer, an estate lawyer in Uniondale, N.Y.
New York's Estate Powers and Trust Law, Section 7-5.2, states that a Totten trust "can be revoked, terminated, or modified by the depositor's will, only by means of, and to the extent of, express direction concerning such trust account, which must be described in the will as being in trust for a named beneficiary in a named financial institution."
In other words, your will can override the 'in trust for' designation on your bank account -- but only if you're very specific. Your will would have to say something like: I hereby revoke my Totten trust at the Reliable Bank (account #123456) naming my daughter Mary Jones as beneficiary, and instead I leave account #123456 to my nephew Frank Smith.
Of course, it's sensible to make sure that there's no conflict between your beneficiary designations and your will.
And if you change your mind about the named beneficiary on a bank account, the solution is to go down to the bank and change the beneficiary designation. That's easier and simpler than changing your will -- not to mention less expensive!
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