A Totten trust is created by the depositor naming a beneficiary; the depositor may deposit or withdraw freely. Which statement correctly describes when the beneficiary has a claim?

• A. Not until depositor dies
• B. Immediately after deposit
• C. Only after the beneficiary reaches age 18
• D. Only if the depositor signs a new agreement

Answer: (A)

A Totten trust creates a payable-on-death arrangement where the depositor retains ownership and control during life. Because the depositor can deposit or withdraw freely, the beneficiary has no present interest in the funds. The beneficiary’s claim arises only when the depositor dies, at which point the balance is paid to the named beneficiary—often outside probate. That’s why the correct statement is that the beneficiary does not have a claim until the depositor dies. The other options would misstate the timing or conditions of the beneficiary’s rights, since age, a new agreement, or immediate interest don’t trigger the beneficiary’s right in a Totten trust.