Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket, New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.
The Facts: My mother opened a joint account with my sister Jane so Jane could pay my mother’s bills. At the time of her death, my mother had $100,000 in the joint account. Jane is claiming that the money in the account is hers since she is the joint account holder. My mother always said she wanted her estate to be divided between all of her children equally. Her Will provides for equal distribution to her four children.
The Questions: Can Jane keep the money in the joint account or must she share it with me and my two brothers? If she keeps the money, is Jane also entitled to a ¼ share of the rest of my mother’s estate?
The Answer: Unfortunately for you and your brothers, unless you can prove that your mother opened the joint account solely for convenience and not as a means of transferring funds to Jane, your sister will be able to keep the money in the account. In addition, Jane will be entitled to a ¼ share of your mother’s probate estate.
Many elderly parents open joint accounts with their children for the convenience of having someone who can pay bills and access funds when the parent is unable to do so. Since jointly held property like bank accounts are not considered part of a decedent’s probate estate, the funds in such accounts generally do not pass in accordance with the decedent’s Will. As you now know, the ownership of so-called “convenience” accounts can easily become the subject of litigation when a parent dies.
If you are unable to appeal to your sister’s sense of fairness and her desire to honor your mother’s wishes, you may have no choice but to seek court intervention to resolve the question of who is entitled to the money in the joint account. The proceeding should be brought in surrogate’s court where you will claim that the joint account was created as a convenience account and that the funds in the joint account are assets of the estate. As the surviving account holder, Jane will likely argue that your mother intended for her to have the money and that the account is not an estate asset. She will base her argument upon the fact that depositing funds into a joint account constitutes prima facie evidence (evidence that seems sufficient at first glance) and a presumption of an intent to create a joint tenancy. In other words, the law states that if someone creates a joint account, it is presumed, at first glance, that they intended the joint account holder to share in the money. When a joint tenancy is created, both joint tenants have unfettered access to use the funds in the account as they please. Upon the death of a joint tenant, the assets in the account automatically become the property of the surviving joint tenant.
Although Jane has prima facie evidence creating the presumption that your mother intended to share the money in the account with Jane, such evidence can be rebutted or disproven with contrary evidence. In the context of the litigation you have the opportunity to try to convince the court that the joint account was simply a convenience account. To do so, you must provide the court with direct proof that your mother did not intend to create a joint tenancy or substantial circumstantial proof that the joint account was opened solely as a convenience. Such proof may include a note from your mother about her reasons for putting your sister’s name on the account, a writing from your sister in which she acknowledges that the account was a convenience account or some reference to the account in your mother’s Will which explicitly states that the account is to be considered an estate asset. Testimony from disinterested parties about your mother’s intent with respect to the funds in the account may also be helpful. If you are able to rebut the presumption relied upon by Jane, the court will likely direct Jane to divide the funds in the account into four equal shares and to distribute one share each to you and your brothers. If you do not prevail, Jane will be allowed to keep the $100,000 and to claim her ¼ share of your mother’s probate estate.
Keep in mind that the type of litigation discussed here can be avoided if the intent of the parent creating the joint account is well documented and the child whose name appears on the account acknowledges that the joint account was opened solely as a “convenience” and not with an intent to create a joint tenancy. Proper legal advise is often useful in ensuring such an outcome.
Linda M. Toga, Esq. provides legal services in the areas of estate planning, real estate and litigation from her East Setauket office.
This article first appeared in the November 10, 2011 issue of the Times Beacon Record Newspapers.