Adding Someone To Your Bank Account For Convenience Can Cause BIG Problems

STOP, COLLABORATE AND LISTEN- think twice before adding someone to a bank account.  

In South Florida it is common for aging parents to 'add' their children, caregiver, or trusted individual on his/her personal account. A typical reason to add someone to a bank account in Florida is so that person can have access to the funds for the original owners benefit. By setting up the account this way, it will make it more convenient during the owner's lifetime to assist in managing the bank accounts and paying bills.

“An account owner’s Last Will & Testament or Trust will not prevent this presumption from arising, and the financial institution has no duty to inform the account owner of this presumption. ”

However, adding someone to a Florida bank account becomes somewhat inconvenient upon the original owner's death. Setting up Florida bank accounts in this manner can lead to expensive litigation between the original owner's heirs to determine the survivorship rights in these joint accounts. Intent will be questioned in addition to undue influence and fraud.

Under Florida Statute Section 655.79, unless expressly stated otherwise in contract, agreement or signature card executed in connection with the relevant account, any account that is titled in the names of two or more persons creates a presumption that all ownership rights in the account automatically pass to the surviving owners upon the death of any owner.  

There are no explicit words that are required for this presumption- just the fact that there are two or more owners.  An account owner's Last Will & Testament or Trust will not prevent this presumption from arising, and the financial institution has no duty to inform the account owner of this presumption. With that said, the surviving owner can simply walk into the bank after the original owners death and withdraw all of the funds as their own!

Good news, there are alternatives available to making an account a joint account. They allow flexibility and also allow the owner to revoke these designations within his/her lifetime:

Alternative #1- "DPOA"

Appoint someone to act as his/her agent under a Durable Power of Attorney

Alternative #2- "POD"

Create a 'pay on death account' where the owner can designate a beneficiary to receive the account upon his/her death

Alternative #3- "ITF"

Create a Totten Trust where the owner maintains complete control over the account during their lifetime, but all rights pass to a beneficiary who is designated 'in trust for'

If you live in Miami-Dade, Broward, or Palm Beach county contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.

You Can’t Predict The Future, But You Can Plan For It.

Estate Planning for Retirement: Pay on Death Accounts

Your estate consists of both probate and non-probate assets. When you prepare a will you include probate assets to be distributed to named beneficiaries. If you have non-probate assets, regardless of whom you name as a beneficiary in the will, they will go directly to the pay on death “POD” beneficiary directly in the document.

Probate Assets:

Personal items, jewelry, art, antiques

Individual assets (property titled solely in your name)

Non-Probate Assets (Pay on Death):

• Life Insurance
• Retirement Accounts (401(k)s and IRAs),
• Annuities
• Bank Accounts (some)
• Jointly owned assets “tenancy by the entirety” “ with rights of survivorship”

A pay on death (POD) account names your beneficiary. As the name suggests, when you (the primary account holder) passes away the assets that are left in the account become the property of the named beneficiary.

“If you have non-probate assets, regardless of whom you name as a beneficiary in the will, they will go directly to the pay on death “POD” beneficiary directly in the document.”

There are some positives that come along with these accounts. These assets are outside of the probate process and there is a direct transfer to the named beneficiary.  You also retain control over the funds throughout your life and have the right to change beneficiaries or even close the account if you want to. Flexibility is certainly a good thing when it comes to your hard earned assets.

However, pay on death accounts are not a comprehensive estate planning solution. These assets are still a part of your estate for estate tax purposes so they do nothing to provide tax efficiency. There are no incapacity provisions, and you may not be able to give varying percentages of the resources left in the account to multiple respective beneficiaries.

If you live in Miami-Dade, Broward, or Palm Beach counties it is time to start preparing your estate-planning portfolio. Make sure both you and your family are taken care of in the future. You can’t predict the future, but you can plan for it.

Contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.