Joint Bank Accounts

Kristen R. Testaverde, Esq.

Many people have, as part of their assets, joint bank accounts.  For example, a married couple may share a bank account, a parent may share an account with a child, or an individual may be named on the account of another for convenience purposes, such as a child of an elderly parent named to help pay various  bills.  On death, joint bank accounts are generally payable to the survivor.  This can cause difficulties in the distribution of estates at the death of a joint owner. 

Joint bank  accounts give ownership rights to both parties named.  During the lifetime of these parties, the account belongs to the parties in proportion to their net contributions unless there is a clear intent and evidence of some other use.  A joint account does not purport to be a transfer of property to the other party, unlike a joint tenancy, which is treated as making an immediate gift to the noncontributor.  In a joint bank account, a gift is not made until a joint owner takes out more than his/her contribution.  Each party however, in the eyes of the financial institution, is entitled to withdraw the entire balance of the account. 

On the death of a joint owner, the balance typically transfers to the surviving owner.  This may have been the intention of the deceased party.  In some instances however, it is not, and may lead to issues in the administration of the estate.  For example, an elderly mother places her son on her bank account for what she deems to be convenience purposes, as he helps to write the checks to pay her utilities each month.  She passes, and son cleans out the account.  Daughter believed that the account should have been part of the probate estate and divided equally among them, causing disagreements and turmoil.  A solution?  Mom could have written a provision in her will stating that all joint bank accounts were for convenience purposes only, and expressed her intent that they be divided.  On the other hand, Mom could have intended her son receive the proceeds, and placing such property in a joint bank account allows the funds to pass by law and outside of the probate process.  He will have immediate access to the funds.

Discuss your all of your assets with your estate planning attorney so that he or she is aware of the existence of such accounts and their types of ownership.  This can help facilitate the correct distribution after death.

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