In 2007, the Female Debtor created two “payable on death” accounts on behalf of her children. In 2008, the Debtor opened two Certificates of Deposit, initially listing her husband as the beneficiary. In 2011, needing funds for home renovations, the Debtor contacted the bank and was advised to withdraw the funds from the 2007 “payable on death” trust accounts. After doing this, the Debtor then changed the beneficiaries of the Certificates of Deposit to be her children, but did not have those CDs converted into “payable on death” trust accounts. After filing bankruptcy, the Trustee sought turnover of those funds.
The bankruptcy court held that despite the Debtor’s intention to convert these into actual trust accounts, which would have excluded the CDs from her bankruptcy estate, the signature cards were unambiguously state that the CDs were “payable on death” accounts and fully within her control and therefore subject to turnover to the Trustee.
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