The Duffey Law Firm Blog

Wednesday, October 11, 2017

Can a writ of garnishment be enforced on an account owned by the debtor and a third party, where a majority of the funds in the account were contributed by the third party?

In Stanbro v. McCormick 105 LLC, 213 So.3d 925 (Florida 4th DCA March 8, 2017), a bank account held in the name of the debtor and her boyfriend’s joint revocable trust was not subject to garnishment because the boyfriend was the primary contributor to the account, and the creditor could not meet its burden to show that the debtor was the exclusive owner of the account funds.

A final judgement of foreclosure was entered against Carol Perfect, and the creditor obtained a deficiency judgement. The creditor moved to garnish Perfect’s bank account, which was held in the name of a revocable trust held jointly by Perfect and her boyfriend, Donald Stanbro. The name on the account was “Donald Standbro and Carol Perfect Revocable Trust, Donald L. Stanbro & Carol R. Perfect, Trustee.” The trust identified Standbro as the initial trustee and Perfect as the successor trustee. At trial, Standbro produced evidence showing that he was the sole owner of the funds and had transferred a majority of the funds (with the exception of $8.90) to the account. Notwithstanding the evidence, the trial court enforced the writ of garnishment.

On appeal, the Fourth District Court of Appeals rejected the trial court’s holding and dissolved the writ of garnishment. For garnishment purposes, the funds in an account are presumed to belong to the person whose name is on the account. However, when an account also reflects the name of a third party (who is not involved with the garnishment), the creditor has the burden prove that the funds belong exclusively to the debtor. In this case, the creditor failed to meet its burden to show that Perfect was the exclusive owner of the account funds, and the writ of garnishment on the account was dissolved.

The Takeaway?

A joint account held by a debtor and a third party can only be accessed by creditors to the extent the debtor contributed funds to the account. This case highlights the importance of obtaining the advice of a competent Florida attorney with regards to the funding of a revocable trust, especially if there are potential creditor issues. 





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