Joint Accounts | Do They Belong to the Estate or Co-Signer?
When “an elderly person with a joint bank account dies, do the funds belong to the decedent’s estate or do they belong to the additional signer as a co-owner of the account?” A recent California Court of Appeal case held that “[s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party . . . as against the estate of the decedent unless there is clear and convincing evidence of a different intent.” This is a basic or black-letter rule, a clear statement of the law. It is also a trap for those inclined to seize upon a seemingly clear explanation of the law that leaves no room for interpretation or nuance.
In estate, trust and elder financial abuse litigation, dueling advocates argue over what acts are within the traditional statement of law and what are outside the black-letter rule. This is the battleground for how to apply the law to different factual scenarios.
So let’s take a look at what appears to be a clear statement of law. Who is an “elderly person”? The rule doesn’t define the term. So in this case we look to California law. California law says that an “’Elder’ means any person residing in this state, 65 years of age or older.” Now that we know who an elder is, we need to know: what is a joint bank account? It turns out that California established a governing statute in 1990 that applies to joint accounts: “‘Joint account’ means an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship.” Checking accounts, savings accounts, and certificates of deposit are all “accounts” under the law. Joint accounts formed with words in the form of a signature card, passbook, contract or instrument can create a joint account. If it’s a joint account, upon the death of any owner, ownership passes to the survivor or survivors.
Now what if the administrator or executor of an estate or the trustee of a trust believes that the account belongs in the estate or trust and not in the pocket of the other party to the account? This belief may soon grow into estate litigation before a probate judge. What might seem at first glance to be easy faces a legal hurdle that is difficult to overcome – the presumption that the depositor intends survivorship rights. A challenge of course may be made but in order for the challenger to prevail he or she must prove by clear and convincing evidence that the depositor had alternative reasons or contrary intent for opening the account. This rule applies even if the depositor, now deceased, was the only depositor to the account and the other signer or co-owner deposited nothing.
So what is clear and convincing evidence? In 1899 the California Supreme Court identified the standard for “clear and convincing” evidence. The California standard requires the evidence be “so clear as to leave no substantial doubt” and “sufficiently strong to command the unhesitating assent of every reasonable mind.” Will this rule apply to all factual scenarios? If you are the surviving party to the account you certainly hope so. Heirs to estates and beneficiaries to trust may have entirely different hopes.
In the real world of joint account disputes, the factual spectrum of intent, timing and original depositor vulnerability is very wide. When was the account formed? An account formed with an elder with Alzheimer’s three weeks before his death is quite a lot different than an account formed with an active and attentive elder long before the elder’s death. It is one thing if the elder never expressed an intent as to the account’s purpose and quite another if the elder made his intent clear that the account was for the use and ownership of all of the parties to the account. The question of vulnerability to undue influence can thwart the ambitions of an elder financial abuser.
The factual elements of a successful California elder financial abuse claim against an abuser include proof by a preponderance of evidence (not clear and convincing evidence) that an individual (and/or his/her assistant) took/hid/appropriated/obtained/ [or] took the decedent’s property; the victim (the decedent) was 65 years of age or older; the taking was for a wrongful use with the intent to defraud or by undue influence; and the decedent was harmed.
So while an abuser thought they could get away scot free, their scheme can be upended by an elder financial abuse action. The abuser will find it difficult to hide behind the more burdensome “clear and convincing” evidence standard applicable in a simple probate account dispute versus the more likely than not or preponderance of the evidence standard in the civil courts.
Law firms like Hackard Law that focus on estate, trust and elder financial abuse litigation must know and apply far more than black-letter law. The law can be nuanced and wholly dependent on the particularities of each case. “The Life of the law has not been logic. It has been experience.” Oliver Wendell Holmes, Jr. Experience counts in most human endeavors. If you would like to question us at Hackard Law about a particular estate, trust or elder financial abuse matter that you or a loved one is experiencing then call us at (916) 313-3030. We represent clients throughout California, including in Los Angeles, Sacramento, Santa Clara, and Alameda. We look forward to hearing your story.
 Estate of O’Connor – filed Oct. 13, 2017, Second District, Div. One, 2017 S.O.S. 5065