October 26, 2017

Joint Bank Account

A typical financial arrangement between an elderly parent and a child is for parent and child to be joint bank account holders. This allows the child to pay various bills for their parent. When the parent passes away, an inevitable legal issue arises. That is, (1) did the parent create the joint account with the intent that it pass to the child upon their death or (2) did the parent simply create the joint account with the intent that it be accessible as a matter of convenience for the child to pay the parent's expenses. If (1), the child receives the bank account as the surviving joint account holder. If (2), the parent's estate receives the bank account and it is distributed via their will or intestate succession.

The applicable law says "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." Probate Code § 5302(a).

For reference, clear and convincing is a higher evidentiary standard than preponderance of the evidence but less than proof beyond a reasonable double. Most people have heard of proof beyond a reasonable double because that is the standard used in criminal cases. Preponderance of the evidence is the normal standard in civil cases.

The following is an example of how this scenario can hypothetically play out. Widowed mother and daughter venture to the local credit union to open a joint bank account. Mother's mobility is limited and she would have peace of mind if daughter could pay her household bills. Son lives in another state so he is unable to be of assistance. Prior to her passing, mother writes a will that devises her entire estate equally to her daughter and son. Mother then passes away. 

In order for the bank account to be an estate asset, son would need to provide clear and convincing evidence that mother intended for the joint bank account to pass via her will instead of to daughter as the surviving joint account holder. 

It is common to find cases where the testamentary document and the joint account arrangement conflict. The reason being is that estate planning is not always the sole impetus for titling one's financial accounts.
This issue was recently litigated in a recent California Court of Appeal case, In Re Estate of O'Connor (2017) ___ C4th___.