In our last blog, I discussed how multiple account holders are presumed to be joint account holders with right of survivorship, so if one owner dies, the remaining funds transfer into the names of the other account holder(s). There are two ways to rebut the presumption, and I discussed how undue influence can be used as a basis to invalidate the joint account distinction. But there is another backup argument if that doesn’t work.
A challenger to the creation of a joint account could argue that the decedent intended to create a convenience account. “[J]oint accounts are also sometimes used as ‘convenience accounts,’ so that another party may more easily handle the financial affairs of the true owner of the asset.” Bronson v. Bronson, 218 N.J. Super. 389, 394 (App. Div. 1987). Intent is a critical element in the creation of these accounts. Sadofski v. Williams, 60 N.J. 385, 395–96 (1972).
In Sadofski, the decedent owned two bank accounts and two CD’s jointly with her daughter. Id. at 388. The daughter testified that the mother told her and the bank that she wanted the account to have both names on it in case anything was to happen to the mother, but that the mother wanted to be the only one to handle the account. Id. at 390. The mother had retained the bankbooks until right before she died and that she handled all the transactions herself without participation from the daughter. Id. at 391. Right before her death, the daughter testified that the mother instructed the daughter to withdraw all the money from the bank, saying that everything in there was hers. Id. at 392. Based on the evidence, the court concluded that the daughter’s testimony regarding the mother’s intent to have her on the account solely for convenience, along with the way the accounts were used solely by her mother, sufficiently rebutted the presumption that the accounts were owned jointly by mother and daughter. Id. at 396.
If you are looking to add your child to an account to be able to manage it for you if you become incapacitated, we recommend you set up the account with the child on there not as an owner, but as your power of attorney for convenience purposes. This way you can avoid a fight amongst your other children when you pass away.
If you are looking for additional details on this topic or if you require advice about your situation, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
Written by Stephen W. Kornas, Esq. of Hanlon Niemann & Wright