A joint tenancy with rights of survivorship is a form of co-ownership that is normally used in co-ownership of real property and bank accounts. Disputes normally occur when a property is co-owned under joint tenancy with rights of survivorship, but only one person contributed to the bank account or for the purchase of such property.
Characteristics of joint tenancy with rights of survivorship
In co-ownership by joint tenancy with rights of survivorship, property is transferred to the remaining survivors and not the estate of the deceased co-owner when such co-owner dies. Ownership is consolidated on one co-owner upon the death of the last surviving co-owner. In simple terms, if property is owned by A and B, in a joint tenancy with rights of survivorship, when A dies, A’s interest is transferred to B and not to A’s estate. A’s heirs do not inherit the property. This is where disputes normally arise.
How to form a joint tenancy with rights of survivorship
In order to form a joint tenancy with rights of survivorship, the formation document must expressly contain “words of survivorship.”
In cases of real property, the formation document is the deed, in which the real property is transferred. The words “joint tenancy with rights of survivorship” should appear in the deed and would normally appear after the names of the grantees. Even if the words “joint tenancy with rights of survivorship” do not appear after the names of the grantees, for as long as it appears anywhere in the deed with language indicating the property is owned with rights of survivorship, this type of language would be sufficient to indicate that the property is being co-owned under joint tenancy with rights of survivorship.
In cases of bank accounts, the formation deed is the signature card. In cases of brokerage accounts, the formation deed is the investment account application. In both cases, words of survivorship must appear in the signature card or investment account application in order for the ownership to be considered that of joint tenancy with rights of survivorship.
If the formation document is silent, the presumption is that the co-ownership is tenancy-in-common, unless the co-owners are spouses. Under tenancy-in-common, property is transferred to the deceased co-owner’s estate upon such co-owner’s death and not to the surviving co-owners. If the co-owners are spouses and the formation document is silent, the presumption is that the property is held under tenancy by the entirety, a form of co-ownership similar to joint tenancy with rights of survivorship.
Terminating a joint tenancy with rights of survivorship in real property
If you are joint tenant of real property, you can terminate a joint tenancy with rights of survivorship by
(a) selling your own interest in the property to a third party,
(b) executing and delivering a deed to the other joint tenants that evidences an intent to sever the joint tenancy, or
(c) filing an action for partition.
A joint tenant cannot sell the entire property but only his interest in the property. When the joint tenant sells his interest to a third party, the joint tenancy with right of survivorship terminates, and the new joint tenants own the property under tenancy in common.
When one joint tenant terminates joint tenancy with rights of survivorship, the relationship is only severed as to that joint tenant. The remaining co-owners still enjoy joint tenancy with rights of survivorship and are not affected by the other joint tenant’s termination.
For example, A, B and C hold the property as joint tenants with rights of survivorship. A wishes to terminate the joint tenancy and sell his share to D. Now, B, C, and D own the property. B and C, with respect to each other’s 1/3 share, are joint tenants with rights of survivorship. D, on the other hand, with respect to B and C, are considered tenants in common. When D dies, D’s share goes to his estate. When B or C dies, it goes to the other surviving co-owner.
The joint tenant cannot dispose of his share via will with the intent of terminating the joint tenancy. In case of conflict between the deed and the will, the deed will prevail. The property under joint tenancy will not pass through probate and will be transferred to the surviving joint tenant. If the joint tenant seeks to terminate the joint tenancy, the joint tenant must, in his lifetime, either transfer it to a third party, file an action for partition, or execute, deliver, and record a deed of severance to his joint tenants.
Terminating a joint tenancy with rights of survivorship in bank accounts
The best way to terminate a joint tenancy with rights of survivorship in bank or brokerage accounts is to close it. This eliminates disputes regarding true ownership over said bank account.
Issues involving joint tenancy with rights of survivorship
Most issues about joint tenancy with rights of survivorship occur when a joint tenant dies. Usually, it is only when the joint tenant dies that the joint tenant’s heirs realize that the property does not go to the estate but to the surviving joint tenant. Litigation almost always ensues when the property is of a substantial amount and the deceased joint tenant was the only person who contributed to the value of said property. This always happens in cases of bank accounts between parents and children, where the child was added to the account for purposes of helping the parent manage his finances.
Different laws apply in joint tenancy in bank accounts as opposed to real estate. For this reason, different legal strategies are applied when contesting property transferred to the surviving joint tenant, depending on whether the property is real estate or a bank/brokerage account.
Setting aside a deed of joint tenancy after the death of a joint tenant
Questioning the validity of a deed of joint tenancy in property is similar to questioning the validity of a will. Some grounds for questioning the validity of a deed of joint tenancy are forgery, fraud, and undue influence. To be successful, we usually use a combination of different grounds to prove that the deed is not valid, such as the employment of fraud and undue influence upon the deceased.
Undue influence occurs when a person unduly influences another person to transfer the property to both persons as joint tenants with rights of survivorship, even if only one person contributes to the entire value of the property.
For example, a parent is buying real property or owns real property already. The child convinces the parent to transfer the real property to both of them as joint tenants with rights of survivorship. A deed is then executed with the parent and child as grantees holding the property as joint tenants with rights of survivorship, even if the property was bought using only the parent’s money. If the parent has other children, the joint tenant-child receives the property to the exclusion of the other siblings. After the parent’s death, the siblings will then question the joint-tenant child’s ownership since the surviving joint tenant-child did not contribute his own money towards the purchase of said property.
To prove undue influence in New York, one must show motive, opportunity, and the actual exercise of undue influence. Motive is shown when the person who is influencing becomes a beneficiary of the property. In the example above, the child becomes a beneficiary of the property because, without contributing to the value of the real property, the child becomes a co-owner with rights of survivorship. The opportunity to exercise undue influence is shown by the proximity of the influencer and the person influenced (i.e., how physically close in distance they are), their time spent together without others present, the relationship of the influencer with the person influenced (i.e., whether the person is dependent on the other for his daily needs, the level of trust between the two, whether there was a fiduciary relationship, etc.), and the mental state of the person influenced (i.e., whether the person influenced had a mental disability, was of old age, in a weakened state, was under the influence of mind-altering substances, etc.). All these factors, together, will show whether the influencer had the opportunity to unduly influence the other. Lastly, the actual exercise of undue influence is usually counted at or near the time the deed was signed. This element becomes apparent when the deed was signed with the influencer present, when the influencer chose the witnesses, and when the influencer was the one who drafted the deed or procured the services of the attorney who drafted the deed and the notary who would acknowledge the deed.
To prove undue influence, medical records of the deceased joint tenant at or near the time of the transfer (usually three years before and two years after the deed was signed) can be obtained to see whether the deceased was under strong medication that could alter his senses. Other documentary evidence, such as correspondences, notes, and witness depositions, can also be used to prove whether the deceased was under undue influence when the deed was executed. If the deed is set aside, the property then passes through the deceased joint tenant’s will or intestate.
To prove fraud in New York, one must show (1) a material misrepresentation or omission of fact (2) made by defendant with knowledge of its falsity (3) and intent to defraud, (4) reasonable reliance on the part of the plaintiff, and (5) resulting damage to the plaintiff.
In cases of deeds, one must show that if not for the material misrepresentation or omission of fact, the victim would not have caused the transfer of property under joint tenancy with rights of survivorship.
Forgery occurs when a person, with intent to defraud, deceive or injure another, falsely makes, completes or alters a written instrument which is or purports to be that of another. The most common form of forgery is when the signature that appears on the deed is not that of the grantor’s.
To set aside a deed granting joint tenancy with rights of survivorship, we usually use a combination of different grounds. The most common ground, however, is undue influence. The documents obtained during the discovery phase will show the which ground is the strongest in setting aside a deed once a joint tenant dies.
Setting aside a bank or brokerage account of joint tenancy with rights of survivorship
To set aside a bank or brokerage account under joint tenancy with rights of survivorship, bank records are usually obtained during the discovery phase. The most common important document in this case are signature cards and investment account applications.
In our experience, here are the things to look out for:
- If the bank or brokerage account is an “or” without words of survivorship, there is no presumption of survivorship. It would belong to the joint tenant who contributed to the account. If both joint tenants contributed, such as in the case of domestic partners, it would belong to both based on the proportion of their contribution, if there is evidence of such proportion. If only one joint tenant contributed, such as in the case of a parent and child, the parent’s estate is entitled to the joint account.
- If the bank or brokerage account includes words of survivorship, there is a presumption that it is a joint account with rights of survivorship, This presumption, however, can be rebutted by a showing of majority of the following factors:
- Decedent was elderly.
- There was no evidence to indicate that decedent intended to create a joint account or that he understood the nature and consequences of a joint account.
- Joint tenant admitted that he could not have withdrawn any money from the accounts without decedent’s permission.
- Decedent’s will leaves all of his estate to his children, share and share alike.
- Respondent’s conduct and statements belie the belief that the money in the convenience account is his.
- Funds were transferred from an earlier account held in the names of decedent.
- There is a fiduciary relationship between decedent and respondent.
- Even if account statements indicate a joint tenancy with rights of survivorship, it is important to review the signature card or investment account application to make sure that: (a) it includes words of survivorship; and (b) all joint tenants are included in the formation document.
- When account statements indicate a joint tenancy with rights of survivorship but words of survivorship are not included in the signature card or investment account application, there is no presumption that the account is a joint account with rights of survivorship.
- Even when words of survivorship are included in the signature card or investment account application, if not all joint tenants are named in the formation document, there is no presumption of joint tenancy with rights of survivorship as to the later-added joint tenant. There must be unity of time, title, interest and possession in joint tenancies with rights of survivorship.
- When there is ambiguity on a joint account where only one joint tenant fully funded the account, there are only three options: (a) it is a joint tenancy with rights of survivorship; (b) it is a tenancy-in-common; (c) it is a joint account for convenience.
- In a joint tenancy with rights of survivorship, the entire proceeds of the account are transferred to the surviving joint tenant.
- In a tenancy-in-common, the original account holder is presumed to have made a gift of one-half (1/2) of the account to the other joint tenant. The other half passes to the deceased joint tenant’s estate.
- In a joint account for convenience, there is no presumption of a one-half (1/2) gift to the other joint tenant. The entire proceeds of the account belongs to the deceased joint tenant’s estate.
Joint tenancy with rights of survivorship often ends in dispute, especially when there are heirs who have been excluded from inheriting the property. An experienced estate litigation lawyer will be able to help you defend property allegedly wrongfully withheld or obtain property that was wrongfully withheld. If you have issues regarding the transfer of ownership after a co-owner dies, we at 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.