WHOSE MONEY IS IT ANYWAY?

First published in the July-August 2007 issue of Women’s Bar News, A Publication of the Women’s Bar Association of the State of New York

Many elderly parents open joint accounts with their children for the convenience of having someone who can pay bills and access funds when the parent is unable to do so. Unfortunately, the ownership of these so-called “convenience” accounts often becomes the subject of litigation when the parent dies.

In the context of the litigation, the surviving account holder usually argues that the account is not an estate asset based upon the rebuttable presumption that the deposit of funds into a joint account constitutes prima facie evidence of an intent to create a joint tenancy. (Banking Law § 675). It is well-settled that upon the death of a joint tenant, the assets in which each joint tenant previously had equal rights automatically become the property of the surviving joint tenant.

In order to rebut the presumption of a joint tenancy, courts require “direct proof that no joint tenancy was intended or substantial circumstantial proof that the joint account had been opened for convenience only.” See Matter if Richichi, 2007 NY Slip Op 01886 (2d Dep’t 2007).

In Richichi, the Second Department affirmed the Surrogate’s finding that the joint account was an estate asset. Based upon documentary proof, the court found that the decedent did not intend to create a joint tenancy but simply to open a “convenience” account with her daughter. In addition to the decedent’s will which explicitly referenced the joint account and provided that her assets were to be divided equally between her four children, the estate produced an agreement signed by all of the decedent’s children in which they acknowledged that any accounts they held jointly with the decedent were established “as a convenience” for the decedent’s benefit.

In light of the Richichi decision, I recommend discussing with clients the benefit of obtaining an acknowledgement from joint account holders that the joint accounts were opened solely as a “convenience” and not with an intent to create a joint tenancy. I also recommend that language be included in the client’s will that specifically references any joint “convenience” accounts they own. If the ownership of the accounts is disputed after the client’s death, the acknowledgement and language in the will should go a long way toward rebutting the presumption of a joint tenancy.

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