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Durable Power of Attorney Authorized Withdrawal

Posted: November 13, 2010 Filed under: Case Law

In Beane v. SunTrust Banks, Inc., Florida’s Fourth District Court of Appeal held that SunTrust had no liability for allowing an individual with a durable power of attorney to transfer $150,000 from a Totten trust intended for another individual. The case is a reminder of the type of disputes that arise when careful consideration is not given to estate planning matters.

According to the court of appeal, the decedent executed a durable power of attorney in 2002 that named her niece as her attorney-in-fact. The durable power of attorney authorized the niece, as attorney-in-fact:

4. To demand, sue for, collect, recover and receive all goods, claims, debts, monies, interest and demands whatsoever now due, or that may hereafter be due, or belong to me . . . .

The after the durable power of attorney was signed, the niece, as attorney-in-fact, transferred $150,000 from the decedent’s Totten trust account at SunTrust Bank, which named a different person as the beneficiary. The court explained that “[a] Totten trust has been defined as “a tentative trust merely, revocable at will, until the depositor dies.” “The act of ‘[p]lacing a bank account in the name of one individual ‘in trust for’ another individual creates a tentative or Totten trust.’” “A Totten trust is different from other trusts in that it is not created with any of the
formalities of a trust or will.”

In 2007, Beane filed suit against SunTrust for allowing the transfer of the funds from the Totten trust. The issue was whether the niece, as power of attorney, had the authority under the power of attorney to withdraw $150,000. The trial court ruled that she did and dismissed Beane’s lawsuit. The Fourth District Court of Appeal agreed, holding “Since an owner of a Totten trust can withdraw from the account without constraint, the prospective Totten trust beneficiary cannot object to the depositor’s withdrawal from the Totten trust.” “Because the depositor can change the beneficiary without constraint, and the prospective beneficiary has no standing to object to such changes, we therefore find that merely withdrawing money from the Totten trust does not, as a matter of law, change the ‘disposition effective at the principal’s death.’ The depositor, or in this case the attorney-in-fact, merely changes the amounts within the Totten trust, which is a right retained by the depositor at all times, or by the attorney-in-fact while the durable power of attorney is in force.”

RE-RECORDING EXPIRED JUDGMENT CREATES NEW LIEN

Posted: November 12, 2010 Filed under: Case Law

Does the re-recording of a certified copy of a judgment after the expiration of the original judgment lien impose a new lien on real property held by the judgment debtor?  Yes, according to the Florida Fifth District Court of Appeal in Sun Glow Construction, Inc. v. Cypress Recovery Corporation.

The outcome in Sun Glow specifically turned on the fact that a circuit court, sitting in its appellate capacity, had earlier ruled that the re-recording of the judgment created a new lien on the judgment debtor’s property, property that was later sold to Sun Glow subject to the lien. The Fifth District quoted from Franklin Financial, Inc. v. White, 932 So. 2d 434 (Fla. 4th DCA 2006) in determining that the county court properly relied on the circuit court’s earlier decision and that the circuit court’s earlier decision was correct:

The statutory mechanism for extending the life of a judgment lien was designed to allow the judgment creditor to maintain its priority over any subsequent lien holders. When a judgment is recorded, the judgment lien takes priority over any liens recorded thereafter. It maintains this priority so long as it exists. If the judgment lien begins to reach its statutorily defined time limit, the judgment creditor may file for an extension pursuant to section 55.10(2). The logical result of filing an extension is that the life of the original judgment lien is extended. By extending the judgment lien’s life, the judgment creditor maintains the judgment lien’s priority over any liens recorded after its original date of recording and also over any liens recorded after its date of extension.

A different outcome is produced if the judgment creditor allows the judgment lien to lapse without filing for an extension. In that case, the judgment lien ceases to exist. The judgment creditor may choose to rerecord the judgment at a later time, but a new judgment lien is created and it takes no priority over liens already recorded. Like a child that wanders out of a queue, the newly rerecorded judgment lien has lost its place and must go to the back and stand behind all previously recorded judgment liens.

We hold a judgment creditor may rerecord a judgment even after the original judgment lien has expired. Franklin Financial’s judgment was a valid judgment against Mrs. [White]. The recording of that judgment created a valid judgment lien.

932 So. 2d at 436.

Admitted: Florida, Kansas, New Mexico (inactive)