Determining actual ownership of bank accounts after the death of a loved one can be challenging. There can be real differences in what the parties to the accounts, the beneficiaries of a trust, and the heirs of an estate believe and what they want. It is difficult at times to find a blueprint in which to operate.
A 2017 California Court of Appeal decision (Higgins v. Higgins) helps to identify some basic guideposts for ownership determination. The case arose from a lawsuit brought by the personal representative of an estate against a wife who agreed to hold funds in trust for her husband's stepmother. After her husband's death she changed the form of the accounts and used the funds for her own purposes. The Appellate Court concluded that the wife held the funds in the accounts in trust for the stepmother and the transfer of the accounts into her own name and use was a wrongful act supporting the imposition of a constructive trust.
I understand that most people seeking information on the web - other than lawyers - are not looking for law review articles. The Higgins case might well support a law review article but let's bring it down to earth. The Court applied the law - basically that when a defendant acquires or detains a specific identifiable property interest that belongs to another the aggrieved party can bring an action for constructive trust to have the property returned. Estates and trusts can be aggrieved parties.
It is not unusual that parties to bank accounts have a "finders-keepers" approach to ownership of the accounts at the death of the accounts' co-holder. The parties to an account have a present right to payment in proportion to their contributions unless there is clear and convincing evidence of a different intent. This can be a stumbling block in elder financial abuse cases where there are disputes over whether an elder really intends to gift account proceeds during her lifetime.
The Higgins case makes clear that other than join accounts, Totten trusts and P.O.D. accounts, "the death of any party to a multiparty account has no effect on beneficial ownership of the account other than to transfer the rights of the decedent as part of the decedent's estate." In other words, don't just assume that a party to a multiparty account receives all funds at the death of the other party. Such assumptions may lead to actions that result in litigation.
Like anything, facts and circumstances differ and the conclusions that can be drawn are dependent on the particular facts of each case. At Hackard Law we regularly represent clients in estate and trust litigation throughout California, whether in Sacramento, Los Angeles, Alameda, San Jose, or San Diego. You can reach us at 916 313-3030, and we'll be happy to talk with you.