Bank Acounts to Avoid Probate: POD vs. ITF accounts
I received an interesting question about the difference for asset protection purposes between bank accounts titled "ITF", or in trust for, and bank accounts titled "POD", pay on death. An example of each account title would be as follows: "John ITF Mary" and John POD Mary. Both accounts are set up by John and funded with John's money. In both cases, when John dies all the money in the accounts passes to Mary outside of any probate of John's estate. The writer reported that one Florida bank permits only ITF accounts whereas a different Florida bank uses only POD accounts. Does the choice of these two titles make any difference in terms of protecting the money from John's creditors during his lifetime.
Here's my understanding, although I know of no cases comparing the two types of accounts. . ITF , "in trust for" implies the existence of a trust relationship so that the beneficiary of the trust (Mary) would have equitable ownership in the account funds from the day John funds the account. . Of John opened a POD accoutn, Mary would have no rights or interest in the account during John's life, and Mary would first acquire an interest upon John's death. From an asset protection standpoint, John is a trustee over Mary's money during his life in the case of an ITF account, and John has no equitable ownership in the money which would be vulnerable to his creditors. Creation of the ITF account is an immediate gift in trust to Mary. If John's POD account John has a life estate in the account and the beneficiary has a remainder interest. During his lifetime John has full access to money in his POD account; Mary's interest is limited to what is left in the POD account upon John's death.. Because John can access for his own use money in a POD account during his lifetime I expect that John's creditors could attack money his POD account as they can get whatever rights John has in the POD account. For that reason, I believe an ITF account provides better asset protection as well as probate avoidance.
posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida
In the case of a CD -- where premature withdrawals are penalized -- can the beneficiary close the inherited account without a penalty? I understand a Florida statute governs this situation. If so, can you provide the statute?
I am curious about a recent (within last year) garnishment action that removed funds from our Florida account titled in both of our names ITF our son's name. This was a Florida account, the garnishment was invoked because of a judgment against my husband. I am not involved in these judgments other than the community prperty connection in our state. Because we live in a community property state, all monies removed from our "joint" accounts here were not arguable. The amount removed from the Florida ITF account was small, however, can we pursue a "wrongful garnishment" action against lawyers who initiated this action on the Florida account?
Since an ITF account is an immediate "Gift" after death; Is it subject to
gift tax from the deceased estate?
To avoid probate, please compare pros/cons of using a revocable trust (requiring transferring assets during life to that trust)vs. a regular Will that includes a testamentary trust--combined with lifetime "POD to Testamentary Trust" accounts--but no lifetime ownership transfers. The latter seems to be simpler and cheaper, but does it contain a trap for the unwary? Comments?
Question - a POD account to a Trustee (friend), not a spouse or family member. The trust devise says - "Two accounts - they are P.O.D. to >>>>>> for bills, tax, whatever". Does that mean the Trustee gets that money personally, or is it for payment of creditors, expenses, etc. with the remainder to the trust?
Thanks.
i just learned that my mother has a pod account and she did not know she had this it is in her name and lists her first and last name and then pod after it. She was not aware of this account being opened in her name. Her savings account is in her name, my name and my sisters name. I believe my sister may have implemented this account. what can my mother do about this account can she have it closed if she wishes to do so. If my sister has written any checks on this account to cash after my mother passes away do they have to be honored. the account they were written on has recently been closed and a new savings account opened in my mothers name only.
I have a question. My father in law put his daughter on his accounts, she withdrew all of the funds prior to his death (checking, all CDs and money markets)and put all of the money in her name, when he died she kept all of the money, and lied to the family by telling them he only had 25,000 she did not share with the family. Even though the money was not hers she kept every penny. The account was set up with him first and her second. It was not anywhere in the will that he gifted or gave any money to her. Under the florida law is she intitled to keep the money??
Supposing there is a bank account that reads:
Owner's name.....In trust for .....owner's adult child*......in trust for .....another of the owner's adult children........
SO when the original owner (parent) dies.......is the account passed on to the first adult child* only......or does it become the account to both children ...to be equally managed or distributed????
Thanks for your help!
Hello and thank you for your blog it is very informative. I have a question. In regards to an ITF account in Florida. What happens if the beneficiary dies and the trustee remains alive? Thanks, -Nelson Miami, FL
If someone has their daughter listed as a POD on their account does this amount totally go to that individual when the mother passes away? If the mother had a will and that indicates all assets are to be divided is this POD account assets included or are the assets assessed only on other accounts? So if the POD was $20k and total remaining assets were $50k (not including POD). Would the daughter receive the $20k plus the percentage of remaining assets?
I have opened a joint with my wife CD account (and two ITF's - my children) with a Bank and I missed the maturity date. The bank renewed the CD account automatically at a ridiculous low rate. Then I've asked the branch manager to renew it at a better rate. He told me, he had to close the account and open a new CD joint with my wife, BUT NO ITF's. He said the bank's policy has changed regarding the ITF's.
I feel that my money are not safe anymore.
What do you suggest I do? I have been a customer of that bank, for over 35 years, and have invested a good amount of money at times in this bank.
We have an unusual situation, which I hope someone can help us with. The account was opened at our Florida branch. Here's the scenario:
We have a POD account with 2 recipients upon death.
John is the account owner - Mary and Bill are his beneficiaries upon death on the account.
John dies first.
Mary dies 2 days after John.
Does Bill have sole rights to the account proceeds or does Mary's estate get 1/2 of the account?
A fast answer would be appreciated.
I have a joint account with my mother and 3 beneficiary's 1 of which is my wife and 2 grandchildren. In the same bank I have a joint account with my wife and 4 beneficiary's her parents and 2 sisters how much am I insured for?
Dear Mr. Alper,
Question for you -- If a POD bank account is set up naming multiple beneficiaries and then later a Will is made up naming only one beneficiary of the entire estate, does the Will take precedence?