Thursday, July 31, 2014

Who Owns a Joint Bank Account When One Account Holder Dies?

Normally when folks think of a "joint bank account," such as between a married couple, the common sense presumption is that both are owners of the entire account, right?  That form of ownership is called Joint Tenancy.  You may be familiar with it from application in real estate; it also applies to personal property, based on the Illinois Joint Tenancy Act, 765 ILCS 1005, et. seq.  One of the key provisions of an asset owned by two or more people in joint tenancy is that, if one of the owners dies, the surviving joint tenants still own the whole asset; the asset is not part of the deceased owner's estate (called a "right of survivorship").

This was the subject of dispute in the recent case Konfrst v. Stehlik, __ Ill.App.3d __, Case No. 1-13-2113 (1st Dist. June 20, 2014), in which the executor of a decedent's estate sought to recover assets from such joint accounts from the other account holder.  The decedent was a widow and opened the subject accounts after her husband died.  The defendant lived next door (and rented that property from the decedent) and was the niece of the widow's late husband.  When the widow opened the accounts, the defendant drove her to the bank and opened the accounts with her.  According to the defendant, they signed the bank's necessary forms to open the accounts as joint accounts.  The defendant then helped the widow pay bills out of these accounts, but defendant never deposited any of her own money in the accounts and never used any of the money for defendant's own purposes.  When the widow died eight years later, there was in excess of $250,000 in accounts, which defendant withdrew.  The bank could not find the signed forms in its records; at trial the defendant was shown a signature card form creating an account in joint tenancy with right of survivorship, and testified that the form she signed was similar.

Here's the issue - Section 2 of the Joint Tenancy Act requires some written instrument showing intent to create a joint tenancy in personal property, such as bank accounts. Otherwise the accounts would be deemed held as "Tenancy in Common," and each owner has title to merely a percentage of the whole (and therefore at the death of an owner, that owner's share goes to their estate).  In this case, there was no signed agreement available at trial, because the bank did not find it in their records.  The trial court found that it was not a requirement to produce the writing itself, and weighing the evidence as a whole found that the defendant had met her burden to show the accounts were held in joint tenancy with right of survivorship, that the decedent intended the funds she deposited in the accounts be a gift to the defendant.  The appellate court affirmed that decision as not against the manifest weight of the evidence.  In doing so the appellate court considered and rejected plaintiff's argument that at least the larger of the two accounts was a "convenience account" and not a joint account with right of survivorship.

The opinion provides a very helpful overview of joint tenancy law as applied to bank accounts, in more detail than we can cover here.  Perhaps the most striking issue in the case is that the bank did not have the signature card in its records.  How many of us, when signing the paperwork to open an account, ask for copies of the signature card forms for our own files?  The defendant in this case was fortunate to have sufficient other evidence to satisfy the trial court as "clear and convincing" proof the accounts were held in joint tenancy.  Because the statute specifically requires a writing (like the signature card), the best practice would be to keep a copy of that writing to clearly show intent.  If you or a family member hold a joint account similarly to that in this case, you may wish to talk with your bank about their file documentation, and perhaps to get a copy of the signature card to confirm how the account is held.

1 comment:

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