When you open a bank account, you have the option of designating a beneficiary of the account to whom the funds will automatically pass when you die. A beneficiary is not the same as a joint account holder who has a right to deposit to and withdraw from the account before and after your death. The Florida law covering payable on death accounts covers all deposit accounts with a payable on death designation, including checking, money-market and certificates of deposit. POD accounts are distinct from those that transfer-on-death, a designation used for stock certificates and investment accounts.
Survivors and Beneficiaries
If a POD account is a joint account, Florida law allows the account to pass to the surviving account holder, not to the beneficiary, upon the death of one of the joint account holders. If the account holder dies and there is more than one beneficiary, the beneficiaries hold equal shares of the account (in other states, account holders may set a different share arrangement for beneficiaries; in Florida, the equal-shares rule prevails). Until the death of the account holder(s), the beneficiary or beneficiaries have no claim on the account funds. Nor does a beneficiary have any voting rights vested in the account if opened through a credit union.
The Florida statute also governs payments by the institution where the account has been established. The account may pay any party to the account at any time on request, or to the beneficiary if the beneficiary presents proof of death of all parties to the account. The account may also pay a personal representative, or heirs of the account holder, upon proof of death of the account holder as well as all other parties and beneficiaries.
The law in Florida protects banks and other institutions from any claim on a payable on death account, as long as the institution made payments to parties and/or beneficiaries in accordance with the law. In effect, banks cannot be sued by anyone for how they handle a payable on death account as long as the bank followed the state's legal rules. As an important adjunct to this rule, Florida also expressly allows payments to parties and beneficiaries whether or not they are disabled or otherwise incapacitated.
An important court case, reached in federal district court, found that the Florida statute did not limit beneficiaries to people. A person establishing a POD account may designate a charitable institution -- in this case, the Salvation Army -- as a beneficiary. By extension, a POD account in Florida may also have a business organization, partnership, or municipality as a beneficiary. This is not always true in other states, however, including Ohio where a beneficiary must be a person. The beneficiary, whether an organization or a person, must conform to the law in presenting proof of death of the account holder before having any claim on the account.