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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.”

Admitted: Florida, Kansas, New Mexico (inactive)