The court said the savings account was “a classic ‘Totten’ or savings account trust whereby a depositor/trustee establishes a savings account for the benefit of a third party as beneficiary, retaining the right to make deposits and withdrawals during the depositor/trustee/s lifetime, and agreeing that upon the depositor/trustee’s death, all funds in the account become payable to the beneficiary”. In terms of trust law, the essential feature of savings account trust is their revocability. “When the debtors filed bankruptcy the Savings Account became property of their bankruptcy estate. The transfer of funds by the debtors into the Savings Account prior to their bankruptcy petition date amounted to nothing more than moving their own money from one pocket to another. There was no transfer for the trustee to avoid. The debtors properly scheduled the Savings Account as an asset and properly exempted it”, the court said, and overruled the trustee’s objection.

On the other hand, the $200,000 is not money that belongs to debtor. That money belongs to debtor’s father. Therefore, the $200,000 is money held in trust by debtor for his father and is not part of debtor’s bankruptcy estate. It should be listed in statement of financial of financial affairs no. 14 as property held in trust to protect it from the trustee.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626)284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.