UPDATE:

This is to follow up to my blog post below regarding the case filed against The Salvation Army claiming that under Florida’s POD statute [F.S. 655.82] a charity is not a "person" and therefore not a permissible POD beneficiary.  The court has granted The Salvation Army’s Motion to Dismiss [click here], holding that F.S. 655.82 does not define the word person and that the context requires that the definition in F.S. 1.01(3) must be used. Therefore, a person for purposes of Florida’s POD statute includes corporate charities such as The Salvation Army.

Special thanks to Miami attorney Kevin E. Packman of Holland & Knight for bringing the dismissal order to my attention.

ORIGINAL POST:

Pay on death or "POD" accountants are familiar territory to Florida probate counsel. As my partner Michele "Mickey" Maracini commented in Salvation Army Accused of Draining Dead Man’s Funds by Jordana Mishory of the Daily Business Review, POD accounts are often used as probate-avoidance devices:

Attorney Michele Maracini at Stokes McMillan Antúnez of Miami, who is not involved with the case, said people frequently use this type of account. She said by leaving an account in trust for a specific person, the recipient is able to bypass the probate process.

POD Account Litigation: Florida Charities Beware!

POD accounts, like any other form of jointly-titled bank account, are not immune from disputes . . . many of which end up getting litigated in court.  I recently wrote about one such case [click here]. The two Florida statutes principally at play in these cases are 655.82 and 655.825.

Due to a quirk in the statute charities may be legally disqualified from being designated as beneficiaries of POD accounts.  That’s the focus of the litigation reported on in Salvation Army Accused of Draining Dead Man’s Funds:

A lawsuit in U.S. District Court alleges the Salvation Army improperly took more than $120,000 from a dead man’s bank accounts — even though the man had left $106,000 of that amount in the charity’s name.

Filed by the estate of Richard Jose Belanger of West Palm Beach, Fla., the Oct. 5 lawsuit claims the Salvation Army improperly took the money left for it in Belanger’s payable-on-death bank account. The suit, filed on behalf of Richard Jason Belanger, a son who is serving as personal representative, claims only a person may be left money in these types of accounts. The suit alleges the account his father left for the charity is invalid.

Family attorney John Cooney said the Florida Legislature did not intend for the 1995 statute that allows for the establishment of pay-on-death accounts to apply to entities or organizations. He drew his analysis from a portion of the statute that requires proof that the beneficiary is alive on the date of the account holder’s death.

"When you have a statute that changes the way the law used to be, you need to interpret it narrowly and strictly," said Cooney, a partner at Arnstein & Lehr in Fort Lauderdale. "It doesn’t matter what the decedent intended. If the decedent wanted to leave money for charity, that’s why we have wills."

The lawsuit is the first legal challenge to the statute in Florida, according to the complaint. An Ohio appellate court found that a similar statute in that state allowed for only people to receive money from these types of accounts.

If Belanger’s estate is successful in its case against the Salvation Army, the case could affect money left for charities across the state.

Lateral Thinking?

By the way, I think this case is yet another example of creative, lateral thinking in the probate litigation context.  Rather then challenge the Salvation Army gift on undue influence or lack-of-capacity grounds, which as litigation goes is always expensive and always full of uncertainty, plaintiff’s counsel took a left turn, read the POD statute and "viola," he developed a low-cost, high probability-of-success litigation strategy where, as plaintiff’s counsel states, "It doesn’t matter what the decedent intended."  The case now becomes an exercise in statutory construction, which is a relatively inexpensive and quick case to litigate. Win or lose, plaintiff’s counsel gets an "A" for lateral thinking.

  • Stephen Heuston

    The plaintiff’s argument may be creative, but inadequate. The plaintiff’s attorney fails to mention that the word “person” is not included in the definitional section of the Florida statute 655.82. The reason for this absence is that Florida Statutes has a definitional section at the very beginning, 1.101(3), that defines the word “person” whenever the word is used throughout Florida Statutes. Person is defined broadly and specifically includes “corporations.” The Salvation Army, like most charities, is a corporation. Also, the Ohio case mentioned by the plaintiff’s attorney is a 1981 case that construed Ohio’s then POD statute that limited POD designations to “natural persons.” A big difference from Florida’s POD statute. Also, in 1984 the Ohio legislature changed their POD statue, in response to the 1981 case, to allow POD designations to charities. The Florida Statute is based on the Uniform Nonprobate Transfer on Death Act. This uniform act, which has been adopted in part by 46 states and the District of Columbia, clearly intended to include corporations and charities as permissible beneficiaries. There is no reported case that has challenged POD gifts to a charity under the Uniform Act.