New York Estate Planning & Elder Law Blog
A Florida Court of Appeals sorted through a complicated question of bank accounts and estates in a case at the end of last year. This case illustrates the complexities of banking law and administering estates in addition to the importance of reviewing the state law regarding estate administration before creating an estate plan.
Facts of the Case
In the case of Brown v. Brown, Elizabeth Brown died in 2007, leaving behind six adult children. She had an estate plan in place that distributed several specific bequests and left the remainder to be distributed equally amongst her children. She named one of her children as the executor of the estate, and he filed this lawsuit against one of his siblings, Joseph.
Ms. Banks had multiple bank accounts that were either joint accounts or payable-on-death (POD) accounts naming Joseph as the survivor or beneficiary. The lawsuit sought to declare that the funds in those accounts were part of the estate and should be split equally amongst the children and not pass directly to Joseph in their entirety.
Ruling of the Trial Court
The trial court in Florida held an evidentiary hearing on the matter and appointed a magistrate for the issue. The magistrate found that all of the funds from all of the accounts, joint and POD alike, should be deposited into one account for the estate and distributed equally to the children. He did so after hearing evidence that Ms. Banks’ intent was for all of her children to share equally in the funds after her death.
The magistrate also relied on Florida law, where Section 655.79 states that “a deposit account in the names of two or more persons shall be presumed to have been intended by such persons to provide that, upon the death of any one of them, all rights, title, interest, and claim in, to, and in respect of such deposit account . . . vest in the surviving person or persons.” However, the same section also provides that The presumption created in this section may be overcome only by proof of fraud or undue influence or clear and convincing proof of a contrary intent.”
The magistrate found that the executor of the estate had proven by clear and convincing evidence that there was intent by Ms. Banks to distribute all of the money to her children and not have it pass to just one. The trial court agreed and upheld the decision of the magistrate. Joseph Banks then appealed.
Reversal on Appeal
The appellate court disagreed with the findings of the magistrate and ruling of the trial court. It stated that the section of law referenced in the trial court’s findings only applied to the joint bank accounts in Ms. Banks’ estate. POD accounts differ from joint bank accounts and are governed by different law. In a POD account, the creator of the account names a beneficiary for the account funds to pass to upon the creator’s death.
Differing from a joint account, Section 655.82 of the law states that for a POD account “on the death of the sole party, or the last survivor of two or more parties, sums on deposit belong to the surviving beneficiary or beneficiaries.” There is nothing in the law regarding POD accounts that allows for a rebuttable presumption like it does for joint accounts. As a result, the joint accounts were distributed amongst the children equally, but the POD accounts remained solely with Joseph as part of his inheritance.