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Pay on Death Accounts
Received an interesting question from a litigation attorney today about fraudulent conveyances. His client had a parent in the hospital with a short life expectancy. Received an interesting question from a litigation attorney today about fraudulent conveyances. 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. .
February 11, 2004 in Planning Tips | Permalink
Comments
I'm in a similar situation.
My mom and her second husband, both german and permanent residents in florida owned a property by the entireties and declared as homestead. Handwritten Last will, signed by both, of 1985 was existent. This will stated that after both their deaths each 1/3 of their combined assets was to be passed on to their children = his 2 and my mothers, me. Unfortunately, this will was not valid in Florida but only in Germany. 2 months before my mom's death in October 1988 they set up a warranty deed deeding 1/3 of their property to me, "where grantors reserve themselves as tentants by the entireties the exclusive possession, use and enjoyment of the above granted premises for and during their natural lifetimes and the natural lifetime of the survivor thereof, which is and remains Grantor's homestead".
An additional agreement was also set up: "Whereas, it was the intent and estate plan of PM and KM that KM daughter AF, receive one-third of their combined estate, and whereas, to effect such estate plan, PM and KM haved deeded an undivided one-third interest in the Property subject to a life estate, to AF. This agreement shall be binding on and inure to the benefit of the parties and their respective successors, assigns, and personal prepresentatives". This deed was set up to express the same wish as their last will.
Now my question: I filed for bankruptcy in Germany November 1998, due to the fact that I had co-signed on a business bank loan for my husband in Germany in 1994. I am a permanent resident since 1960, my husband is not. I have homestead protection and live in Florida, I have owned a home here in Florida since 1985. I earn approx. $1300 net monthly based on German bankruptcy law I have to send my pay stubs to my insolvency manager every month. Everything exceeding approx. $1420.00 I have to submit to her. I did not file for bankruptcy in Florida, I have no other debts than the one in Germany.
According to bankruptcy law in Florida anything inherited after bankruptcy, can be kept.
So if my mom's spouse dies,which is to be expected since he is very ill and undergoing chemotherapy, is my 1/3 ownership protected and can it be considered a legitimate estate planning or can it be seized by the creditor in Germany?
Is there anything must do or can do to protects my 1/3, or is it OK the way it is now?
Florida is a great new chance for me and I wish to build up future assets. Togehter with my dad I purchased a lot as tentants in common. I took out a loan for this purchase. Could my creditors seize this new acquired property?
I hope that these questions are a challenge to you and that you can provide me with the answers.
thank you
PS: Reading your web site was very interesting and informative. I'm sure it has helped a lot of people.
Anita
Posted by: Anita | Aug 10, 2004 9:57:28 PM
