Q:

What does "ITF" mean in banking?

A:
QUICK ANSWER

"ITF" in banking stands for "in trust for." It means that the owner of the account is acting
as the trustee of the funds, which transfer to the beneficiary of the account when the
owner dies.
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What is WACC?

What does IRA stand for?

What is the easiest way to avoid probate?

FULL ANSWER

"In Trust For" accounts are a method for someone to ensure that the funds in his bank
account transfer to someone else with little difficulty if he passes away. The owner of the
account retains control of the funds as long as he lives and is permitted to make
changes at any point. Banks in some states prefer to use the "payable on death"

designation, which also pays the balance of the account to one or more beneficiaries
when the account owner passes away.
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Q:
Why should you set up a trust?
A:
QUICK ANSWER

A person should set up a trust because it can help financially inexperienced family
members, particularly minor children, to avoid going through the probate process after
the grantor's death, according to USA.gov. A trust quickly transfers assets to the
beneficiaries upon the grantor's death.
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What is a generation-skipping trust?

What should you know about a living trust?

How does a living trust work?

FULL ANSWER

A trust also allows for early management of personal assets in the event the grantor
becomes incapable of managing them on his own, notes USA.gov. Other reasons to set
up a trust are to decrease estate taxes and contribute to payment of these taxes by
providing liquid assets. Moreover, a trust involves more private terms compared to a
will.
Trusts work by enabling a legal entity called a trustee, such as a bank's trust
department, to handle the trust for a grantor or the individual who creates the trust,
explains USA.gov. The grantor also selects beneficiaries. In some cases, a single
person can be the grantor, trustee and beneficiary. In these cases, the grantor must
designate a successor trustee and beneficiary in the event of his death or incapacity to
handle the trust.
It is essential to consult a qualified lawyer who specializes in estate planning when
considering trust funds, as experienced lawyers are knowledgeable in particular state
regulations, recommends USA.gov. When creating a trust, a person must decide on
investment strategies and division of assets.
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What Happens if I Leave a Bank Account 'In Trust For' a

Person Who Isn't Related to Me?
Q: If I have an ITF ('In trust for') bank account, and I name someone who isn't related to
me and also my son as the beneficiaries, what would happen with my account when I
pass away? -- BN via email

A: 'In trust for' (ITF) accounts are also known as 'Pay on Death' or POD accounts.
They automatically go to the named beneficiaries at your death, so this account would
be divided between your son and your friend. Each of them could transfer his share into
a new account in his own name.
Be sure you've identified both beneficiaries by name on the bank form, and that the
account title makes it clear that you want the account to pass to them. You don't have to
specify their relationship to you.
If your name is Cindy Jones, for example, the account title should be 'Cindy Jones in
trust for Samuel Johnson and Frederick Jones.'

Assets with named beneficiaries -- retirement accounts, life insurance policies, and 'in
trust for' bank accounts -- pass to those beneficiaries 'by operation of law'. That's legal
jargon for 'automatically.' It means that they don't go through probate, unlike the assets
you leave in your will.
You can name anyone you wish as the beneficiary of your bank account; it doesn't have
to be a blood relative.
The FDIC covers ITF accounts for up to $250,000 per account owner per
qualifying named beneficiary. (In other words, you won't get per beneficiary coverage if
you leave an account in trust for 'my children'.)
The $250,000 limit is the new FDIC standard, in effect only through December 31, 2013.
On January 1, 2014, the standard FDIC limit will return to $100,000 per depositor for all
account categories except IRAs and certain other retirement accounts, which will
remain at $250,000 per depositor.
Who is a qualifying beneficiary? Under new FDIC rules adopted in September 2008,
any person, non-profit organization, or charity qualifies for per beneficiary coverage.
(The old rules pretty much restricted qualifying beneficiaries to a small group of your
blood relatives.)
What does 'per owner, per qualifying beneficiary' mean? If you're the sole owner of this
account, your two beneficiaries each have up to $250,000 of coverage. In other words,
the account is covered for a total of $500,000. You don't get an extra $250,000 of
coverage on the ITF account for yourself.
I can hear you wondering, 'But what if I leave the account to a non-qualifying
beneficiary, like a partnership or a for-profit corporation? Isn't it covered?'
Yes, it is -- along with your other individual accounts at that bank.
The FDIC provides separate insurance for accounts in each of four distinct categories:
individual accounts (those in your sole name); jointly-owned accounts; revocable trust
(including 'ITF') accounts; and Individual Retirement accounts and certain other selfdirected retirement accounts. Each category except trust accounts gets up to $250,000
of coverage for all the accounts in the category. Trust accounts get up to $250,000 per
owner per qualifying named beneficiary.
(Please note that the retirement account category doesn't get per beneficiary coverage!
All your retirement accounts at one bank are covered for up to $250,000, period -- no
matter how many beneficiaries you have on them.)
Your ITF account is included in the individual account category. Let's say that in addition
to this ITF account, you have checking and savings accounts at the same bank.
Together, the three accounts are covered for up to $250,000.

For more information about these rules, go to the FDIC's Web site, here.

Pay on Death vs. In Trust For bank accounts

By Juan C. Antnez on January 18, 2007Posted in Practice & Procedure

Jonathan Alpers Asset

Protection Blog had an interesting post entitledBank Accounts to Avoid Probate: POD vs. ITF
accounts. In estate administrations you come across pay-on-death POD bank accounts and intrust-for or ITF bank accounts (also known asTotten trusts) all the time. Jonathan makes some
interesting points regarding the differences between these two non-probate accounts on assetprotection grounds. Although Im not sure I agree with his conclusions, heres an excerpt:

Heres my understanding, although I know of no cases comparing the two types of

accounts. . ITF , in trust for implies the existence of a trust relationship so that the
beneficiary of the trust (Mary) would have equitable ownership in the account funds
from the day John funds the account. . Of John opened a POD account, Mary would
have no rights or interest in the account during Johns life, and Mary would first
acquire an interest upon Johns death. From an asset protection standpoint, John is
a trustee over Marys money during his life in the case of an ITF account, and John
has no equitable ownership in the money which would be vulnerable to his creditors.
Creation of the ITF account is an immediate gift in trust to Mary. If Johns POD
account John has a life estate in the account and the beneficiary has a remainder
interest. During his lifetime John has full access to money in his POD account;
Marys interest is limited to what is left in the POD account upon Johns death..
Because John can access for his own use money in a POD account during his

lifetime I expect that Johns creditors could attack money his POD account as they
can get whatever rights John has in the POD account. For that reason, I believe an
ITF account provides better asset protection as well as probate avoidance.
A Totten trust (also referred to as a "Payable on Death" account) is a form of trust in the United
States in which one party (thesettlor or "grantor" of the trust) places money in a bank account or
security with instructions that upon the settlor's death, whatever is in that account will pass to a
named beneficiary. For example, a Totten trust arises when a bank account is titled in the form
"[depositor], in trust for [beneficiary]".
Contents
[hide]

1Origin

2Totten trusts today

3See also

4References

Origin[edit]
The name is derived from Matter of Totten, 179 N.Y. 112 (1904), the case decided by the New York
Court of Appeals which established the legality of this practice. Although this method of creating a
trust did not meet the formal requirements of trust creation, or the testamentary formalities required
to make a valid will, the Court noted that such an arrangement typically involved a small amount of
money left by a person of modest means, who could not otherwise afford to establish a legal
mechanism for passing the specified property. For this reason, the device is sometimes called a
"poor man's will". The funds in question are not subject toprobate and, if held in a bank account,
are insured in the same manner as any deposit. The beneficiary has no access to the account until
the depositor's death and need not be notified that the account exists. This is also called a tentative
trust because it is contingent upon the death of the settlor or creator of the trust account.

Totten trusts today[edit]

Most U.S. states now recognize the validity of Totten trusts. The Restatement 3d of Trusts (Section
26) and the Restatement 3d of Property (Section 7.1 comment i) also recognize its validity. Such a
device can be revoked at any time by the settlor, either by closing the account or by executing a will
which disposes of the property in the account. The funds in the account can be reached by the
creditors of the settlor during the settlor's life. If the intended beneficiary predeceases the settlor,
then the gift will lapse, and will generally not be saved by an anti-lapse statute.
A Totten Trust is classified as a "testamentary substitute" because it avoids the need for the assets
held in the account to go through probate.

Totten trusts can be created only with certain types of depository accounts or securities; in particular
they can not be used to conveyreal property.
More generally, Totten trusts are sometimes described as "Arrangements for deposit accounts." [citation
needed]