Answer:
If the account is set up under a bona fide trust, the trustee would be accountable to the beneficiaries of the trust for personal use of the trust's funds.
On the other hand, if there is no bona fide trust, but the account is set up in the form "John Doe as Trustee for Samantha Smith" (a conventional way to style a Totten trust account), the funds are actually John Doe's, and his designation of Samantha as a beneficiary is entirely revocable. He can treat the funds as his own, and, if the account still is open and Samantha is still designated beneficiary as of John's death, the funds become hers. In such a case, she has no claim on John or his estate for anything he has done with the funds prior to his death.
First published on BankersOnline.com 2/14/11
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