August 6, 2010

Joint Bank Accounts

It  is quite common for a husband and wife or domestic partners (same-sex couples/mature couples)  to jointly hold title to a bank account, whether checking, savings or both. For example, John Smith and Mary Smith have a joint bank account at the local credit union. Generally speaking, money remaining on deposit in a joint account at the death of a party belong to the surviving party or parties and not the estate unless there is clear and convincing evidence of a different intent subject to Prob C § 5600. Prob C § 5302(a).

Of note, Prob C § 5600 refers to transfers to ex-spouses, which are considered null and void if the transfer was done prior to or during marriage. For example, John divorces Mary before he passes away. Consequently, Mary would not be entitled to inherit from John the joint bank account per Prob C § 5600. 

Regardless, if John Smith passes away, $250,000 is remaining in the bank account and John is still married to Mary at his death, then Mary Smith would solely inherit this bank account. In order to do this, Mary would most likely have to present to the financial institution:

1. A certified copy of the death certificate
2. Proof of the client's identity, and
3. A copy of the checkbook

What is particularly relevant is that the surviving joint account holder, and not the estate, is entitled to the bank account. For instance, if John had a will directing that all of his estate be given to Aunt Gladys, then the joint bank account would not be included in his estate and thus Aunt Gladys would not be entitled to any portion of that bank account.

There is a common misperception that beneficiaries under a will are entitled to all of the will writer's possessions. This is not true. Numerous assets are not governed by the terms of a will.