Not a Lexis+ subscriber? Try it out for free.
LexisNexis® CLE On-Demand features premium content from partners like American Law Institute Continuing Legal Education and Pozner & Dodd. Choose from a broad listing of topics suited for law firms, corporate legal departments, and government entities. Individual courses and subscriptions available.
By Jennifer F. Hillman*
accounts are frequently utilized to assist the elderly or infirm with their
financial obligations. The account
holder will add an additional person to the account which gives them the
ability to write checks, pay bills and perform other banking functions for the
convenience of the account holder.
However, the existence of two names
on a bank account often leads to litigation after the account holder passes
away, and it must be determined whether the account was a convenience account
(whereby the balance will pass to the estate of the account holder) or whether
it was intended to be a joint account with survivorship rights (whereby the
balance of the proceeds will pass to the additional person on the account
outside of the decedent's estate).
A recent decision by the New York
Appellate Division Second Department illustrates how complex this question can
become. In Matter of Yaros, 90 A.D.3d 1063, 935 N.Y.S.2d 627 (2d Dep't 2011) [enhanced version available to lexis.com subscribers],
the court reviewed the decision of the Surrogate's Court Queens County which
denied a motion for summary judgment by petitioner who claimed she was the
rightful owner of the proceeds of a specific bank account.
The Court noted that under NY Banking Law Section 675, the deposit of funds into a
joint account constitutes prima facie evidence of an intent to create a joint
tenancy, however that presumption can be rebutted "by providing direct proof
that no joint tenancy was intended or substantial circumstantial proof that the
joint account had been opened for convenience only." Matter
of Richichi, 38 A.D.3d 558, 559, 832 N.Y.S.2d 57 (2d Dep't 2007) [enhanced version available to lexis.com subscribers].
The Court determined that the
petitioner submitted evidence sufficient to rebut the statutory presumption
that a joint account was created including: (i) that the petitioner had
previously referred to the account as a "dual signature account" to "safeguard"
her father's money; (ii) decedent was the sole depositor to the account; (iii)
decedent's daughter never made a withdrawal; (iv) a joint account was a
substantial deviation from the decedent's previously expressed testamentary
plan; and (v) although the account stated it was a joint account, there was a
requirement that both the decedent and the daughter were required to sign
before payment or delivery of the property would be made.
In opposition, the Court found
there were triable issues of fact regarding the decedent's intent including the
statutory presumption under the Banking Law, as well as the testimony of the
bank employee who was present when the account was opened, and explained to the
decedent the gift tax implications that he would incur and the implications of
giving away half of his assets.
Accordingly, the Second Department affirmed the lower court's denial of
and other similar cases highlight the negative impact of convenience accounts
when they are not properly opened or utilized.
Before adding anyone to a bank account, an individual is well-advised to
carefully review the account documents and otherwise make certain that their
true intentions are reflected.
Jennifer F. Hillman is an attorney at Ruskin, Moscou
Faltischek, P.C., Uniondale,
New York where her practice
focuses in the area of trust and estate litigation. She can be reached at firstname.lastname@example.org
. . . .
Explore the LEXIS.com Estates, Gifts & Trusts and Elder Law resources
Discover the features and benefits of LexisNexis® Tax Center
For more information about LexisNexis products and
solutions connect with us through our corporate