Green v. Green
1989 WL 61772, 1989 R.I. LEXIS 111, 559 A.2d 1047 (1989)
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Rule of Law:
A deposit of one's own money into a bank account in their name as trustee for another creates a valid, revocable 'Totten trust.' Upon the depositor's death, if the trust has not been revoked, the funds pass directly to the named beneficiary outside of the probate estate, provided the depositor's intent to create such a trust is established.
Facts:
- George L. Green and Hilda A. Green married in 1949.
- During their marriage, George Green assumed responsibility for most of the couple's finances.
- George Green created eight separate bank accounts, contributing all the funds himself and naming himself as trustee for various beneficiaries, including his wife Hilda and his three children from a prior marriage (George Jr., Elizabeth Swope, and James).
- Green retained physical possession of the bankbooks for all eight accounts throughout his life, made at least one withdrawal, and reported the interest income on his personal tax returns.
- Green informed his daughter, Elizabeth Swope, of the accounts and his specific intention to use them to transfer his assets upon death and avoid probate.
- George L. Green died on March 7, 1985, without a will.
- Following his death, the funds in the eight bank accounts were distributed directly to the named beneficiaries.
Procedural Posture:
- Hilda A. Green (plaintiff) filed a petition in the Pawtucket Probate Court seeking to recover funds distributed to George L. Green's children from trust accounts.
- The Probate Court denied the plaintiff's petition.
- The plaintiff appealed the denial to the Superior Court.
- After a consolidated non-jury trial, the Superior Court justice held that the accounts were valid Totten trusts and the funds were properly distributed.
- The plaintiff (appellant) appealed the Superior Court's judgment to the Rhode Island Supreme Court, where the children of George L. Green are the appellees.
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Issue:
Does a depositor's act of placing their own money into a bank account titled 'in trust for' another, while retaining full control over the account during their lifetime, create a valid trust that passes the funds to the beneficiary upon the depositor's death?
Opinions:
Majority - Fay, Chief Justice
Yes. A depositor's act of placing money in an account titled 'in trust for' another creates a valid trust that passes the funds to the beneficiary upon the depositor's death. The court held that the creation of a valid Totten trust is primarily a question of the depositor's (settlor's) intent. The form of the account itself creates a rebuttable presumption, or a prima facie case, that a valid trust exists. The burden then shifts to the party challenging the trust to provide evidence that the settlor did not intend to create one. In this case, George Green's actions and statements—specifically telling his daughter he intended to avoid probate—strongly indicated his intent to create these trusts. The fact that Green retained control over the accounts, kept the passbooks, and used some of the funds is not inconsistent with a valid Totten trust, as such trusts are revocable by nature during the settlor's lifetime. Therefore, the plaintiff's evidence was insufficient to rebut the strong presumption that the trusts were valid.
Analysis:
This decision reaffirms the legal validity of Totten trusts in Rhode Island as a simple and effective non-probate transfer device. It clarifies the evidentiary standard, establishing that the form of the account creates a strong presumption of a trust that is difficult to rebut. The ruling provides legal certainty by confirming that actions consistent with a revocable trust, such as the settlor retaining full control and access to funds, do not invalidate the trust's ultimate purpose of transferring assets at death. This holding solidifies the Totten trust as a reliable estate planning tool for individuals wishing to bypass the formal probate process.
