Rogers Towers, P.A. and the Florida Banking Law Blog have previously emphasized how provisions of Chapter 655 of the Florida Banking Code governing the creation and administration of checking and savings accounts in the names of multiple parties are primarily designed to protect banks in establishing and maintaining such accounts. The Florida legislature did not create Chapter 655 to determine issues of ownership of funds placed on deposit in such accounts. Florida’s First District Court of Appeal underscored this position in a recent case involving competing claims to funds held in a pay-on-death (“POD”) account.
Creation of POD Account
Most banks and credit unions offer POD accounts that permit the depositor to name one or more beneficiaries of the account who will be entitled to the funds upon the death of the depositor. The beneficiaries have no interest in the funds prior to the depositor’s death. In the recent case of Keul v. Hodges Boulevard Presbyterian Church, Florida’s First DCA dealt with the intersection of the POD statute, Section 655.82, Florida Statutes, with the familiar general law governing the abuse of confidential or fiduciary relationships. In that case, an elderly account holder and her husband established a trust which provided that, upon her death, the balance of her estate was to be given to the Church. At the time of her death, she maintained multiple credit union accounts with an aggregate total of approximately $330,000. Originally established as joint accounts with her husband, who predeceased her, the account holder’s caregiver (an unrelated neighbor and friend) induced her to establish a POD account with the credit union, naming the caregiver and relatives of the caregiver as beneficiaries. The account holder died only days after the transfer of her funds to the POD account. The result: the credit union disbursed the funds to the caregiver, and the Church received nothing.
Abuse of Confidential Relationship Not Trumped by Operation of POD Account Statute
The Court determined that the caregiver occupied a fiduciary or confidential relationship and that she had abused that relationship by using undue influence to procure the POD designation from the account holder. The caregiver claimed that since Section 655.82 provides that the ownership of the funds on deposit in a POD account vests by operation of law upon the death of the depositor, the transfer could not be questioned. The Court rejected that argument, noting that the circumstances of the creation of the POD account could be subject to a claim of breach of fiduciary or confidential relationship. Significantly, the Court held that the absence of a specific provision in Section 655.82 to make POD accounts expressly subject to challenge in cases of undue influence (as is the case with respect to Section 655.79, addressing joint accounts) did not operate to insulate the creation of a POD account from such claims, noting that banking laws, designed primarily to regulate banks, are not designed to decide issues of ownership.
The Court’s holding recognizes that Section 655.82 is designed to provide instruction to financial institutions (and a safe harbor if they comply with the law) with respect to how and to whom the funds on deposit are to be disbursed, and is not designed to determine who owns the money.
