By: Edward L. Kelly and Karl R. Gruss
Florida law recognizes, and most banks offer, multiple forms of account designation to meet the desires and needs of individual customers. Keep in mind, however, that the standard demand deposit account agreement (whether checking or savings), is primarily, and understandably, designed to guide and instruct the bank with respect to the payment of checks drawn upon, or withdrawals made from, such accounts. A depository institution does not want to become entangled with issues regarding the ownership of the funds on deposit in accounts designated in the names of multiple parties and to which there may be competing interests. Chapter 655 of the Florida Banking Code includes a number of provisions primarily designed to govern and protect the financial institution in establishing and maintaining checking and savings accounts (including, in most cases, certificates of deposit) in the names of multiple parties, but those same provisions may also have adverse consequences for the uninformed depositor.
Most banks and credit unions offer the following types of multiparty accounts: (i) joint accounts, (ii) convenience accounts and (iii) pay-on-death (“POD”) accounts. Florida common law also recognizes accounts set up under the so-called “Totten Trust” doctrine (accounts designating the account holder as trustee for another designated person, where no express trust exists), although the POD account is intended as a statutory replacement for the Totten Trust. Bank personnel are neither equipped nor required to give advice with respect to the legal differences in these accounts, although the bank may provide explanations in the accompanying account rules, so it is up to the customer to select the appropriate account designation (often presented as a list of options on the signature card agreement).