“But Mom only added my brother so he could pay estate expenses and then the money was supposed to be divided equally amongst all of the children as the Last Will & Testament says!”
Almost every day, a prospective client calls to say that a sibling was added to Mom’s bank account, either as a joint tenant or as the pay-on-death beneficiary, solely for “convenience” purposes so he or she could pay estate expenses and that it was Mom’s intention that the remaining funds be distributed equally to all of her children. Naturally, the sibling who was added to the account does not share this view (which is the reason for the phone call). Invariably, the sibling who was added is the one who lives closest to Mom so it is simple for him to rationalize and justify keeping all of the money – even when that is not what Mom wanted – because “I was the one helping out.” In this way, the elderly Mom accidentally sows the seeds of estate litigation by adding Son to her account to avoid probate.
My overwhelming experience after 20+ years of estate litigation is that elderly person – especially widows and widowers – frequently add a child to an account to avoid probate, which it does, but they do so without understanding the ramifications of the designation. Widow Mom will simply go to the bank and tell the bank representative that she wants to add Son to her account so Son can help pay bills. The bank representative hears – “add Son to my account to he can help me pay bills” – and then completes the paperwork without explaining or perhaps even understanding the legal importance of and the distinction between the designations.
Joint Account vs. Pay-On-Death Accounts
Joint accounts and pay-on-death (“POD”) accounts are similar because upon the death of the owner, all title and ownership pass to another individual whether that individual is the joint tenant or the designated, pay-on-death beneficiary and both a joint account and a POD account avoid probate; however, the similarities end there.
A joint account is an account where more than one person owns it and each owner has equal rights and access to the account from the moment the joint tenancy is created. For example, Mom adds Son as a joint tenant on her checking account so Son can help Mom pay bills. The account is titled “Mom and Son” or “Mom or Son.” All of the money that is deposited into the account is Mom’s money, but Son can write checks and withdraw funds from the account during Mom’s lifetime. Upon Mom’s death, the entire balance passes to Son outright.
A pay-on-death account is an account where one person (could have multiple owners) owns the account and upon the death of the owner, the account passes to another individual(s), i.e. the POD beneficiary. For example, Mom has a checking account in her sole name but she adds Son as the pay-on-death beneficiary. The account is titled “Mom p/o/d Son.” Son has no right to use the money in Mom’s account while she is alive. Son cannot write checks and he cannot make withdrawals. However, upon Mom’s death, the account pays to Son. This is similar to a beneficiary designation on a life insurance policy.
So what do I tell my prospective client whose sibling won’t share?
Florida Statute 655.79 deals with deposits and accounts in two or more names. The first part of the statute creates a legal presumption that the intent of the joint account holders was that upon the death of one of them that all rights, title and interest in the deposit account will vest in the survivor. (F.S. 655.79(1)). However, the second part of the statute says that the presumption can be overcome if there is proof of fraud, undue influence, or clear and convincing evidence of a contrary intent.
So in the case of a joint account, if you can prove that Son was added to Mom’s account because of fraud or undue influence or if you have clear and convincing evidence that Mom did not intend for ownership to vest in Son after her death, then you stand a chance of recovering Mom’s account for her intended beneficiaries.
Florida’s POD statute creates no such presumption. Florida Statute 655.82 governs POD accounts. It provides simply that upon the death of the owner the sums on deposit belong to the beneficiary. You could have a notarized letter from Mom saying she made the designation for convenience purposes only and wanted it to be distributed equally to everyone and it makes no difference. (This is not to say that the prospective client does not have other available causes of action, but it will not be as simple as a declaratory action with an evidentiary hearing to establish what Mom wanted vis-a-vis that lone account.)
The First District Court of Appeal analyzed the distinction between joint and POD accounts in Joseph H. Brown v. Frank Brown, Jr., 149 So.3d 108 (Fla. 1st DCA 2014). Elizabeth Brown had six children who she treated equally in her Last Will and Testament. At the time of her death, she had five accounts either joint with or POD to her son, Joseph. The accounts were worth more than $100,000. Another son, Frank, was appointed curator of Elizabeth’s estate. When Joseph refused to deliver the bank money to the estate, Frank sued Joseph for the return of the money to the estate so it could be divided equally amongst the children according to Elizabeth’s Will. An evidentiary hearing was conducted and the magistrate found that there was clear and convincing evidence that it was Elizabeth’s intention to add Joseph for convenience purposes only and that she wanted the bank accounts to pass to all of her children equally. Joseph appealed and the First District Court of Appeals said the magistrate got it half right. Because there was substantial competent evidence to overcome the presumption that the joint accounts were intended to pass to Joseph, the appellate court said the findings were correct that the joint accounts should be returned to the estate. However, because the POD statute contains no such presumption, it did not matter what the evidence was about Elizabeth’s intent and the money from those accounts belongs to Joseph.
The First DCA’s legal analysis is correct. The statutes create an unfair result. It is my experience that from the vantage point of the elderly parent who is adding a child for convenience purposes only to an account, there is no distinction between a joint account and a POD account. Consequently, the rebuttable presumption that applies to joint accounts should also apply to POD accounts, but that is a matter for legislative drafting committees and the legislature.