Pay on Death Accounts

Jon Alper Florida Exemptions

Received an interesting question from a litigation attorney today about fraudulent transfers and conversions. His client had a parent in the hospital with a short life expectancy.  The parent owns a 50% interest in a homestead property in Florida, and he has a $100,000 in a bank account designated pay on death to child. Question posed was whether parent should withdraw cash, give money to the child, in order to avoid the hospital and doctors going after the money to pay medical bills.

I advised attorney to have client maintain money in pay on death account. Giving the money to the child while the parent is still alive could be attacked by the parent’s creditors, such as his medical providers and hospital, as a fraudulent conveyance. This would result in the surviving child being named a defendant in a lawsuit and put in a position of defending her deceased parent.

Assuming the pay on death account was established some time before the present illness, the creation of the child’s contingent interest, her inheritance of the account upon her parent’s future death, could more easily be defended as legitimate estate planning designed to avoid probate in the advance of any illness and contingent monetary liability to pay for medical care. .

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