Probate Litigation and Joint Bank Accounts — Are Your Accounts Properly Titled?
Today, we continue our look at the probate process in California and specifically how titling of bank accounts may affect the probate process. Bank accounts properly established can effectively become non-probate assets.
As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.
Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact Ben, Steve or me to set up a date and time.
Today’s article is brought to you by Benjamin H. Eagleton
Many of my clients a
re familiar with the effect of holding bank accounts “jointly.” They understand that upon the death of one joint-owner the bank account is owned by the survivor. Recall, this is a Non-Probate Transfer discussed in Introduction to California Probate – Part One, and commonly referred to as a “Right of Survivorship.”
However, oftentimes there’s confusion between titling an account jointly and merely adding an authorized user to the account for the sake of convenience. For example, I routinely consult with elderly clients who have added a child to their checking account for help paying bills. They’re shocked to learn that the child isn’t just authorized to sign checks, but legally owns half of the account and upon their death will own 100%. This causes discord in the family and creates a hotly litigated issue, one that California courts have long grappled with: When an elderly person with a joint bank account dies, does the account belong to the decedent’s estate or to the additional signer as a co-owner?
History of Joint Tenancy Law re Joint Accounts
The first California law concerning joint tenancies in property was Civil Code §683, enacted in 1872, amended in 1935, and 1990. Presently, the controlling law is Probate Code §5100, et seq., also known as the California Multiple-Party Accounts Law (“CAMPAL”). A “Joint Account” is one that’s payable to any joint owner. Checking accounts, savings accounts, and certificates of deposit all fall within the CAMPAL Joint Account definition. According to Probate Code §5302, unless there’s clear and convincing evidence to the contrary, the Joint Account balance belongs to the surviving party.
Litigation re Joint Accounts: Intent…
In hundreds of reported cases, families and friends have litigated this issue. Courts have had to decide what the bank depositor’s intent was when they opened the joint account, or when an additional signer was added to an existing bank account. On one side the heirs and beneficiaries argue: the balance belongs to the Estate- that the decedent only added a signer for convenient management of their affairs. On the other side, the co-owner claims a right of survivorship and that no funds belonging to the Estate.
The most common rule applied is that absent clear and convincing evidence to the contrary, the joint account balance belongs to the survivor. A legal presumption is created by titling an account jointly and to paraphrase a recent holding by the California Court of Appeal’s Second Appellate District in the Estate of O’Connor, 16 Cal. App. 5th 159, that’s a tough presumption to overcome. “Clear and convincing” evidence has been described for well over 100 years by the Courts as being so clear as to leave no substantial doubt. This is a much higher burden to meet than a mere preponderance of the evidence.
In order to overcome the presumption created by titling an account jointly, a Court will examine any admissible evidence with probative value. One reliable way to prevent litigation over joint bank accounts is to Memorializing Intent. Statements of intention can be included in a will or trust. Strong, clear and concise statements of intent are given considerable weight by trial Courts. These statements can sometimes even deter potential litigation. However, the issue of intent will be applied at the time the account was opened and it cannot be changed later.
Proper Trust Funding can prevent litigation over joint bank accounts. For example, I advise all of my clients to fund their deposit accounts (accountings holding ‘after-tax’ dollars) in the name of their Trust. By doing so, their successor Trustee or a co-Trustee can conveniently pay bills on their behalf.
Another planning method to prevent litigation over joint bank accounts is by using a well drafted Durable Power of Attorney. This instrument allows another person to access your accounts and to pay bills on your behalf and doesn’t require any re-titling whatsoever.
Are Your Accounts Properly Titled?
Litigation can easily be prevented by a thorough review of one’s assets, and by consulting with a competent Estate Planning Attorney. If you have already consulted an Attorney- check their work. Did they obtain and review the titling of your accounts? Did they provide you with instructions for re-titling assets properly in your Trust? Have you updated beneficiary designations on your accounts? Do you also have a Durable Power of Attorney? These questions are all part of the BPE Law Group’s Estate Planning Consultation.
——————————————————————————————————————
The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business, and estate planning issues for over 20 years and have been assisted numerous clients in probate matters. If you have questions concerning any legal matter, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com or Benjamin at bheagleton@bpelaw.com. Our flat fee consults for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
Today, we continue our look at the probate process in California and specifically how titling of bank accounts may affect the probate process. Bank accounts properly established can effectively become non-probate assets.
As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.
Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact Ben, Steve or me to set up a date and time.
Today’s article is brought to you by Benjamin H. Eagleton
Many of my clients are familiar with the effect of holding bank accounts “jointly.” They understand that upon the death of one joint-owner the bank account is owned by the survivor. Recall, this is a Non-Probate Transfer discussed in Introduction to California Probate – Part One, and commonly referred to as a “Right of Survivorship.”
However, oftentimes there’s confusion between titling an account jointly and merely adding an authorized user to the account for the sake of convenience. For example, I routinely consult with elderly clients who have added a child to their checking account for help paying bills. They’re shocked to learn that the child isn’t just authorized to sign checks, but legally owns half of the account and upon their death will own 100%. This causes discord in the family and creates a hotly litigated issue, one that California courts have long grappled with: When an elderly person with a joint bank account dies, does the account belong to the decedent’s estate or to the additional signer as a co-owner?
History of Joint Tenancy Law re Joint Accounts
The first California law concerning joint tenancies in property was Civil Code §683, enacted in 1872, amended in 1935, and 1990. Presently, the controlling law is Probate Code §5100, et seq., also known as the California Multiple-Party Accounts Law (“CAMPAL”). A “Joint Account” is one that’s payable to any joint owner. Checking accounts, savings accounts, and certificates of deposit all fall within the CAMPAL Joint Account definition. According to Probate Code §5302, unless there’s clear and convincing evidence to the contrary, the Joint Account balance belongs to the surviving party.
Litigation re Joint Accounts: Intent…
In hundreds of reported cases, families and friends have litigated this issue. Courts have had to decide what the bank depositor’s intent was when they opened the joint account, or when an additional signer was added to an existing bank account. On one side the heirs and beneficiaries argue: the balance belongs to the Estate- that the decedent only added a signer for convenient management of their affairs. On the other side, the co-owner claims a right of survivorship and that no funds belonging to the Estate.
The most common rule applied is that absent clear and convincing evidence to the contrary, the joint account balance belongs to the survivor. A legal presumption is created by titling an account jointly and to paraphrase a recent holding by the California Court of Appeal’s Second Appellate District in the Estate of O’Connor, 16 Cal. App. 5th 159, that’s a tough presumption to overcome. “Clear and convincing” evidence has been described for well over 100 years by the Courts as being so clear as to leave no substantial doubt. This is a much higher burden to meet than a mere preponderance of the evidence.
In order to overcome the presumption created by titling an account jointly, a Court will examine any admissible evidence with probative value. One reliable way to prevent litigation over joint bank accounts is to Memorializing Intent. Statements of intention can be included in a will or trust. Strong, clear and concise statements of intent are given considerable weight by trial Courts. These statements can sometimes even deter potential litigation. However, the issue of intent will be applied at the time the account was opened and it cannot be changed later.
Proper Trust Funding can prevent litigation over joint bank accounts. For example, I advise all of my clients to fund their deposit accounts (accountings holding ‘after-tax’ dollars) in the name of their Trust. By doing so, their successor Trustee or a co-Trustee can conveniently pay bills on their behalf.
Another planning method to prevent litigation over joint bank accounts is by using a well drafted Durable Power of Attorney. This instrument allows another person to access your accounts and to pay bills on your behalf and doesn’t require any re-titling whatsoever.
Are Your Accounts Properly Titled?
Litigation can easily be prevented by a thorough review of one’s assets, and by consulting with a competent Estate Planning Attorney. If you have already consulted an Attorney- check their work. Did they obtain and review the titling of your accounts? Did they provide you with instructions for re-titling assets properly in your Trust? Have you updated beneficiary designations on your accounts? Do you also have a Durable Power of Attorney? These questions are all part of the BPE Law Group’s Estate Planning Consultation.
——————————————————————————————————————
The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business, and estate planning issues for over 20 years and have been assisted numerous clients in probate matters. If you have questions concerning any legal matter, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com or Benjamin at bheagleton@bpelaw.com. Our flat fee consults for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.