The Limits of “Totten Trusts” as a Tool for Avoiding Probate Litigation
At Bleakley Bavol Denman & Grace, our estate litigation attorneys often deal with situations where siblings are fighting over an inheritance from a parent’s estate. Many parents try to preempt such conflicts through a non-probate transfer of assets, such as placing a house in a living trust or having a bank account be “payable on death” to a named beneficiary. Unfortunately, such measures can still sometimes fail due to a misunderstanding of how the law works.
Brothers Fight in Florida Probate Court Over Late Mother’s Accounts
A recent decision from the Florida Third District Court of Appeal, Izquierdo v. Izquierdo, provides a helpful example. This case involved a dispute between two brothers named Antonio and Carlos over funds they controlled as the joint co-guardians for their deceased mother. Originally, the funds were held in what are commonly known as “Totten Trust” accounts.
A Totten Trust is another name for a payable-on-death bank account. In this case, Antonio and his mother were the joint owners of five bank accounts that were payable on death to certain named beneficiaries. But in 2016, Antonio closed those accounts and opened new ones under his own name that he held in trust for his mother. Shortly thereafter, Antonio initiated proceedings in Florida to be named plenary guardian of his mother.
Carlos filed his own competition petition and the probate court decided to appoint both brothers as co-guardians. At that time, the judge ordered Antonio to transfer the funds in his possession to a single guardianship account. Antonio complied and the funds remained in the guardianship account until the mother died in 2019.
Several years later, in 2023, Antonio filed a new petition seeking a declaration that the funds in the guardianship account should still be subject to the same payable-on-death beneficiaries as the original Totten Trust accounts. Carlos opposed his brother’s petition, arguing that the funds were the mother’s sole property when she died and therefore a part of her probate estate. The court agreed with Carlos and dismissed Antonio’s petition.
The Third District affirmed that decision. It explained that Totten Trusts are a “tentative trust” that is “revocable at will” until the original depositor dies or decides during their lifetime to complete their gift to the beneficiary. Here, there was no attempt made to preserve the Totten Trust beneficiaries when the probate court ordered the funds transferred to the guardianship account. Indeed, the Third District noted that neither brother raised an objection at the time. So in effect, the transfer of funds revoked whatever Totten Trusts existed.
Contact a Tampa Probate Litigation Attorney Today
Disagreements among family members are not uncommon in a probate setting. When these disputes rise to the level of litigation, however, it is important for all parties involved to seek the advice of experienced legal counsel. The Tampa probate litigation attorneys at Bleakley Bavol Denman & Grace, can represent you in a wide range of estate matters. Contact us today to schedule a consultation.
Source:
3dca.flcourts.gov/content/download/2457090/opinion/Opinion_2024-1426.pdf
