Small Bank Accounts… Easier Way to Probate?

An interesting topic arose at the last meeting of the Florida Bar Real Property, Probate & Trust Law Section (“RPPTL”). Bankers have proposed legislation which may make it easier to distribute certain accounts held by a decedent at a financial institution. The account must have $10,000 or less (a “small account”).

Under current law, if a decedent owns a small account at  a financial institution that does not have a payable on death (“POD”) or transfer on death (“TOD”) designation, then a summary administration is generally required to distribute such small account to the beneficiary. For small accounts, attorney fees can be more than the actual account and the financial institution has no way to distribute the small account.

The PROPOSED legislation provides that a financial institution can pay the small account to a “surviving successor”.  A surviving successor is defined as a surviving spouse, if any, and, if not, an adult child, if any, and, if not, the decedent’s parent.

The surviving successor must sign an affidavit which provides, among other items,  they are the person entitled to the funds and there are no other surviving successors, there are no creditors and no personal representative has been appointed or summary administration has been commenced. The bank has NO requirement to determine that the affidavit is truthful. An affidavit form is provided in the statute.

The statute also provides that the banks are indemnified and the surviving successor is personally liable to the decedent’s creditors, and to others if they have lied in the affidavit. The statute also provides that any false statement given to a financial institution commits theft subject to Florida law.

Until this past RPPTL meeting, the RPPTL position has been to oppose such legislation. Generally, there were no safeguards for this small account distribution procedure. Further there IS a statute to probate such accounts. The RPPTL position has now been amended to oppose such legislation UNLESS safeguards are provided to protect the rights and interest of the person rightfully entitled to the proceeds, the constitutional right of the decedent to direct the disposition of his or her property and the rights of creditors to recover debts through a probate proceeding.

Remember that this legislation is PROPOSED AND HAS NOT BEEN ENACTED.

ADVICE: Keep an eye out on this legislation. Obviously this may help families whose loved ones die with very little assets and no creditors. However, it is not hard to imagine people taking advantage of this procedure through a false affidavit. Talk was lively in the RPPTL meetings as the potential for abuse is great. A committee will be looking at this proposed legislation.

WORD OF THE WEEK: Unclaimed property is property that is not claimed by the owner for more than 5 years after the property becomes payable or distributable to the owner or the beneficiary.  You can find such money on a website specific to Florida or a website for the United States. Forms are provided that you can complete but, in most cases, when dealing with a Florida decedent, a summary administration (if deceased for more than 2 years) will be required.

GENEROSITY IS A KEY TO HAPPINESS…REACH OUT AND HELP SOMEONE TODAY! 😎