California Joint Account Estate Disputes | Who Gets the Money?

A frequent issue arising in California estate and trust litigation involves joint accounts. Trust and estate litigators regularly address the common questions concerning joint accounts in disputed estates:

• What is California law on joint bank accounts?
• Does the form of ownership of joint accounts matter?
• How does California treat joint savings accounts?
• Does California freeze joint bank accounts when one person dies?

A recent California Court of Appeal case is helpful in explaining the law as to the accounts. For these blog purposes, I’ll draw from the case’s generalities and minimize some of its factual specifics. Ralph, the father of three daughters, passed away in December 2009.

A will, trust and joint bank account existed at the time of Ralph’s death. Ralph’s trust specified that the trust assets are to be distributed evenly between Ralph’s three daughters, Lisa, Stephanie and Tina. Ralph’s trust owned two residences and a parcel of land. Ralph also owned a Franklin Fund account.

Ralph and Lisa, his daughter, were listed as joint-tenants with right of survivorship. The account, opened in 1985, listed Lisa as a co-owner. Lisa had no involvement in the opening of the account. Lisa never deposited any money into the account. Lisa never withdrew any money from the account. All account dividends were paid to Lisa’s father, Ralph.

Eleven days before Ralph’s December 2009 death, Ralph prepared a will and trust. The will left specific instructions to remove Lisa as the sole beneficiary of the Franklin Fund account. The will specifies that Ralph wanted the beneficiaries of the account to be all of his three daughters: Lisa, Stephanie and Tina.

Ralph wanted the Franklin Fund money to be placed into his trust and to pay off the mortgage of his home. Two sons were specifically disinherited.

In January 2010, just a month after Ralph passed away, Lisa transferred the Franklin Fund money to an account in her name. A dispute arose between Lisa and her sisters. Lisa’s side argued that the Franklin Fund money belongs to her. They cited Probate Code Section 5302(a), which provides in part:

Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent.

Arguments against Lisa’s position came from a legislative commentary that “under Section 5302, the intention to negate survivorship may be shown to have existed after the time of the creation of the account.”

It certainly seems like Ralph’s words, some 14 years after the account’s creation and 11 days before he died, evidenced his intention to negate survivorship. The will specifically provides that Lisa is to be removed as the sole beneficiary of the Franklin Fund account. The Appellate Court distinguished between the rights of beneficial owners of an account and the responsibility of a financial institution to pay the proceeds to pay according to the terms of the account. The Court explained:

The financial institution may pay the surviving party according to the terms of the account, but the decedent’s estate has a claim for the funds against the surviving party. This result achieves the dual aims of (1) honoring the actual intent of the decedent as to the disposition of his assets, and (2) ensuring the financial institution has an ascertainable, objective basis upon which to pay out the funds in a manner that does not subject it to liability. Here, it was proper for the financial institution to pay out the funds to Lisa, as the terms of the account listed her as having a right of survivorship, but Ralph’s estate had a valid claim for the funds against Lisa.”
The Court also noted that while a right of survivorship cannot be changed by a will the court can consider a will’s language as “evidence of intent.”

Further stating that the Court’s “ultimate aim is to ascertain…Ralph’s subjective intent as to the disposition of assets. To that end, it would be counterproductive to blindfold the trial court to expressions of intent found in a will.” While the Appellate Court addressed other issues, the ultimate decision was to send the matter back to the trial court. The Court noted that Lisa’s right of survivorship in the joint account was negated and the disposition of the account funds were part of his personal estate and subject to probate.

It is little wonder that challengers and defenders in estate and trust litigation are sometimes baffled by seemingly contradictory laws. Hackard Law, a California estate and trust litigation law firm, focuses on significant estate and trust cases where we think that we can make a substantial difference and there are parties who can be made legally responsible for their actions.

We litigate for the most part in California’s largest urban areas, including the Superior Courts of Orange, Los Angeles, Santa Clara, San Mateo, Alameda and Sacramento Counties. We’ll be happy to speak with you about your case. Call us at Hackard Law: 916 313-3030.