As individuals become of advanced age, it is common for them to add the name of a trusted family member, other than their spouse, to their bank accounts. The purpose of jointly titling accounts in this fashion is often for convenience purposes, enabling the added person to easily access the accounts in the event their elderly loved one is unable to access the accounts due to medical or other issues. However, in the event of the death of the original account owner, this joint titling of accounts can be a complicating factor in the distribution of the deceased person’s assets. As many probate lawyers can attest, a dispute can arise as to whether the added person is entitled to the funds in the account by right of survivorship, or instead, the funds should be included as part of the residuary of the decedent’s estate and distributed pursuant to the terms of the will (or under intestacy law in the event there is no will). The answer to this question arises from the Multiple Party Deposit Account Act.
Under the Multiple Party Deposit Account Act, during the lifetime of the persons named on an account, a joint account belongs to the persons “in proportion to the net contributions by each to the sums on deposit,” unless the terms of the contract indicate a contrary intent or there is clear and convincing evidence of a different intent at the time the account was created. N.J.S.A. 17:16I–4(a). In a situation like the one described above, often the original owner is the only depositor, and thus while still living, the original owner owns all of the money in the account.
When a party to a joint account dies, however, there is a rebuttable presumption that a right of survivorship was created. N.J.S.A. 17:16I–5(a) provides:
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 intention at the time the account is created.
In other words, unless beneficiaries of the estate can prove the decedent had some other intent, or that the joint account was the product of undue influence, it is assumed that the added person on the joint account becomes the owner of the funds in the account. On the bright side, numerous cases in New Jersey recognize the possibility of joint accounts being established for convenience in handling the financial affairs of a decedent. However, such determinations are highly fact sensitive, as emphasized in a recent Appellate Division case, In the Matter of the Estate of Aurelia DeFrank.
In DeFrank, the Appellate Division reversed the decision of the trial court, which had granted summary judgment in favor of the defendant joint account owner. The trial court had determined that under the Multiple Party Deposit Account Act, the joint account owner was entitled to the proceeds of the joint account.
The Appellate Division reversed essentially because “the motion judge looked only at the facts and circumstances extant at the time the joint accounts were established and therefore ignored what transpired after…” The Appellate Division explained that, in evaluating who the decedent intended to receive the proceeds of a joint account, it is necessary to first look at
[W]hether the accounts were “validly created,” i.e., whether undue influence was exerted over the decedent, and even if not, look at “all direct and circumstantial evidence available … ” to determine whether the decedent intended to create a survivorship right.
The Appellate Division specified that events or gifts made after the creation of the joint account had to be considered to determine the intent of the decedent.
The Appellate Division in DeFrank remanded the case, implying that the matter, at least at its present juncture in discovery, could not be resolved by way of a summary judgment motion. This result suggests that either additional discovery or a trial was necessary to resolve the case in the absence of a settlement. The DeFrank case also illustrates how, due to the applicable legal framework, the resolution of a seemingly limited, straightforward question as to the distribution of joint accounts under the Multiple Party Deposit Account Act, can require extensive discovery by probate lawyers if the parties cannot agree upon a settlement. Unfortunately, the need for careful documentation as to the intent of a decedent regarding who should inherit the funds from a joint account usually becomes apparent only after the person dies.
The probate lawyers of the Law Office of Bart J. Klein counsel clients regarding disputes over estates. We welcome you to contact us for further information. When navigating a dispute in relation to a loved one's estate, a probate lawyer can be instrumental in protecting your rights or the rights of a loved one's estate.
© 2018 Law Office of Bart J. Klein