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Bank Accounts In Trust For Others
Many people set up bank accounts for their minor children under Florida’s uniform gift for minors act. When a parent files bankruptcy all bank accounts in their name is generally part of the non-exempt bankruptcy administration. However, an account which a parent owns in trust for a minor child is usually not considered the parent/debtor’s property as the parent is acting as trustee for the minor child who is not old enough to have their own bank account.
A slightly different situation arose at a creditors meeting this week. My client told the trustee that her mother established and funded a bank account for the debtor’s child- the mother’s grandchild- and named the debtor as trustee over the account. The child/grandchild beneficiary was over 18 years of age. The beneficiary was entitled to the money in the account. The account is not under the uniform gift for minors act because the beneficiary is not a minor. I think I was able to persuade the bankruptcy trustee that the account is not the debtor’s property. Under Florida law, you can create an unwritten trust over personal property. The grandmother created an express, oral trust for her grandchild and made the debtor trustee. The debtor did not fund the trust and had no equitable interest in the account. In my opinion, the money in this account should not be part of the bankruptcy estate for the benefit of the debtor’s unsecured creditors.
posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida
August 2, 2006 in Chapter 7 | Permalink
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Comments
I would greatly appreciate any help with this matter. I am now 27 years old, but was awarded a trust fund from a car accident when I was 5 years old. Unfortunately, my mother was appointed the guardian of my trust fund when I was approximately 12 years old. I say unfortunately because my mom has NO business sense whatsoever. At the time of my 18th birthday, she told me there was no money left in my trust fund, instead of the $30,000+ as was expected. Obviously, I was very upset but never pushed the issue because I felt it would accomplish nothing.
Yesterday, we were talking and the subject came up. She mentioned that she had not spent all of my trust fund, but that it had been "churned" along with some of her funds by an investment company she was then involved with. I was shocked because I am 99% certain that my trust fund (having been set up by the State) was invested in a Bank, and not that particular investment firm. I never saw any close-out documentation, and she says she doesn't remember ever signing anything. Could it really be possible that she just got confused and there is some money sitting in a trust fund for me somewhere? Where can I start to research this with no paperwork whatsoever? If you can help me at all, thank you so very much!!!
Posted by: Sandi | Sep 28, 2006 2:00:15 PM
Jonathan - I would point out that the trust situation you describe seems different from a scenario I sometimes see in Georgia - where a debtor may be a signatory on an elderly parent's bank account. In past cases, the trustees have always taken the position that the debtor is a co-owner and half of the equity is estate property.
I am not aware of any Georgia law providing for an "unwritten trust," but that argument is a great idea and I may try it the next time this situation arises.
Posted by: Jonathan Ginsberg | Aug 3, 2006 7:29:23 AM
