One of the things that we often deal with
in bankruptcy is the joint bank account where one of the parties listed on the bank account
is not filing for bankruptcy. This can come in many different situations. Very often our client comes in and says that
while they are on the title to their son’s car, they didn’t make any of the payments.
Any payments made were made by the son. The only reason that they were on the title is
because at the time the car was purchased the boy was a minor.
And therefore they had to be listed on the title. But they don’t have any money in
the car and they never used the car. The other example is bank accounts somebody
might have a bank account and they list another family member, a father mother sister or brother
jointly on the bank account so that if something happens to them there’s someone to step
right in who has authority to write checks to pay bills as they become due. The question
then becomes how is something like that how is that property treated in bankruptcy. As a general rule, you might say well the
asset is owned fifty-fifty. That doesn’t always apply. Because the situations that
we always run into and let me use the bank account example. We had a case recently that
a lady had a bank account, her husband passed away, all of the life insurance proceeds went
into the bank account. At the bank’s suggestion, she listed her brother who lived in another
state as a joint signer on the account so that if anything happened to her he could
step in and take care of the day to day needs. A couple years later the brother who’s completely
forgotten about the bank account, files bankruptcy doesn’t even list the account because he’s
forgotten about it, and then in the course of the bankrupty it comes to light and the
trustee says well it’s a joint account so the trustee is after half the money. And at the time of the bankruptcy filing there
was $140,000 in the account. We ended up being retained by the sister who was not filing
bankruptcy who had deposited all of the life insurance proceeds into that account. We were able to defeat the trustee’s claim
on the basis of what we call a resulting trust. And we established that the brother who filed
bankrupty he didn’t put any money into the account he never took any money out of the
account. He never even had possession of any checks if he wanted to take money out of the
account. He had forgotten what bank the account was even located in and it didn’t even come
up until after he filed bankruptcy. And in Florida law, the courts have held that
in that situation the brother holds what the law calls bare or legal title in trust for
the sister. And they have no equitable interest in the assets, of the account. So all of the
account belongs to the sister and the brother filing bankruptcy had zero interest in the
account and the sister was able to keep all of those funds. What we will generally do is if we recognize
a situation like that before filing bankruptcy, we go ahead and suggest that one or the other
be removed from the account so that we don’t have to deal with that issue going through
bankruptcy. Again, this is another one of these areas where it might sound simple but
the devil’s in the details and it can be very complicated if you have any situation
like that seek professional advice.