If you or a family member inherited a joint bank account, you are probably wondering if the joint bank account is part of the decedent’s estate.
If you inherited the bank account, the good news is that a joint bank account generally is not considered part of the probate estate, and you can immediately receive the funds from such joint bank account simply by submitting an affidavit and a copy of the deceased joint bank account owner’s birth certificate. In joint bank accounts with rights of survivorship, the surviving joint bank account owner automatically assumes full ownership of the funds upon the death of the other joint bank account owner without going through probate proceedings.
If it is your family member who has inherited the bank account and you feel that the family member should not have inherited it, the good news is that some states will have rules on joint bank accounts which would rebut the presumption and give rise to the conclusion that a joint bank account is part of deceased person’s probate estate.
For example, in New York, when the signature card or ledger includes words of survivorship, the presumption arises that the joint bank account owners established the bank account with rights of survivorship. This presumption of survivorship, however, can be rebutted by a showing that the joint bank account was established for the convenience of one bank account owner only. When it is only one bank account owner who makes deposits and withdrawals and the other bank account owner only makes withdrawals for the benefit of the principal bank account owner, the principal bank account owner is presumed to be the sole owner and upon his death, the proceeds of such bank account should pertain to his estate.
When is a joint bank account not considered part of the estate?
A joint bank account with rights of survivorship is generally considered not part of the probate estate. The money in the joint bank account automatically transfers to the surviving joint bank account owner upon the death of the other owner without probate proceedings and upon the presentation of the death certificate and an affidavit.
The joint bank account is an estate planning tool used by individuals to transfer property to their designated beneficiaries without going through probate. In joint tenancy with rights of survivorship, both joint bank account owners have full ownership over the bank account. They can withdraw the entire amount in the joint bank account without the consent of the other. In the same way, a creditor can levy or freeze the entire amount in the bank account for the sole debt of one joint bank account owner (subject to certain income exemptions). When a joint bank account owner dies, the entire amount in the bank account becomes the sole property of the other joint bank account owner.
New York Banking Law § 675 establishes a presumption of joint tenancy with rights of survivorship when two or more persons open a bank account, making a deposit of cash, securities, or other property. Matter of New York Community Bank v. Bank of America, et. al., 169 A.D.3d 35 (2019).
This presumption is established when the signature card or ledger that creates the bank account includes words of survivorship. Absent these words of survivorship, no statutory presumption of joint tenancy with rights of survivorship is created with the bank account of two joint owners, and the joint bank account will be considered for convenience only.
When is a joint bank account considered part of the estate?
A joint bank account for convenience usually occurs when a parent adds the child as a joint bank account owner to help the parent pay his bills, manage his finances, and make other transactions. When the joint bank account is established for convenience, the proceeds of the bank account is considered part of the probate estate of the decedent because the surviving joint bank account owner did not contribute any amount to the joint account or withdraw any amount in the bank account without the authority or approval of the principal bank account owner. In essence, the other joint owner was added simply for the convenience of the principal owner.
In these cases, a joint bank account is not the appropriate estate planning tool. A financial power of attorney is a more suitable estate planning document for these types of circumstances.
If a family member has inherited a joint bank account for convenience and has already received the proceeds of said bank account, your remedy is to first get a personal representative (executor or administrator) of the estate appointed by the court. In New York, the personal representative can institute discovery and turn over proceedings with the court, which would direct the surviving joint bank account owner to show proof why said bank account should not be considered as a joint bank account for convenience.
How to prove that a joint bank account was established for the convenience of one joint bank account owner only
Under New York Banking Law § 678, a joint bank account for convenience is a bank account established by two persons for the convenience of one account owner only. In a joint bank account for convenience, there are two parties: the joint bank account owner for whose convenience and benefit the bank account was established for (the “principal bank account owner”) and the joint bank account owner who is added for the convenience of the principal joint bank account owner.
For example, if you have a bank account and you add your child to the bank account to assist you with bills payment, check writing, and making deposits and withdrawals, you are the joint bank account owner whose convenience and benefit the bank account was established for (the principal bank account owner) and your child is the joint bank account owner who was added for your convenience.
Although there is a presumption that a joint bank account is a joint tenancy with rights of survivorship, this presumption may be rebutted by alleging that it is a bank account for convenience and providing proof that the joint bank account was established for the convenience and benefit of one bank account owner only.
In Viggiano v. Viggiano, 136 A.D.2d 630 (N.Y. App. Div. 1988), the Court held that a joint bank account held by a husband and the husband’s mother was a joint bank account for the convenience of the mother. In that case, the husband’s ex-wife sought to levy the joint bank account held by the husband and the husband’s mother for post-divorce child support arrears. The husband’s mother showed proof that the husband did not have any interest in the account, because the mother maintained sole possession of the bankbook, took possession of all interest earned and paid all taxes due on the interest. In addition, the husband never made deposits or withdrawals from the account. It was the holding of the Court that:
“The burden of proof to rebut the presumption that a joint account was intended rather than a convenience account in that form is upon the defendant husband and his mother (Sherman v Georgopoulos, 84 A.D.2d 811). The facts presented showed an intention to create a convenience account and not to give the defendant husband any interest in the account. Thus, the presumption that a joint account was intended was rebutted (Wacikowski v Wacikowski, 93 A.D.2d 885). Absent any controversion of those facts, the plaintiff wife, as a matter of law (see, Matter of Phelps v Kramer, 102 A.D.2d 908), can no longer rely on the presumptive rights of her ex-husband in the account as a joint tenant.”
Although the general rule is that joint bank accounts do not form part of the probate estate, there are remedies for personal representatives who feel that such joint bank account should form part of the estate. State rules vary and you should contact your estates lawyer who can give you advice on how the law treats joint bank accounts. If you have legal issues regarding a joint bank account, the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.