A recent California Court of Appeal decision discusses what happens to the balance left in a jointly held bank account after one co-owner passes away. (Estate of O'Connor (2017) 16 Cal.App.5th 159.)
When an elderly person with a joint bank account dies, do the funds belong to the decedent’s estate or do they belong to the additional signer as a co-owner of the account? Under California law, “[s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party . . . as against the estate of the decedent unless there is clear and convincing evidence of a different intent.”
In the reported opinion, the Court of Appeal ultimately decided that because there was no clear and conclusive evidence of a contrary intent, the money passed as a matter of law to the surviving joint owner of the accounts upon the passing of the decedent (versus going to the trust of the decedent for distribution under the terms of the trust).
The California Multiple-Party Accounts Law (CAMPAL), Probate Code section 5100 et seq., is the governing statute for such accounts. (Lee v. Yang (2003) 111 Cal.App.4th 481, 489.) Under CAMPAL, multiple party accounts include joint accounts. (Prob. Code, § 5132, subd. (a).) “ ‘Joint account’ means an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship.” (Prob. Code, § 5130.) Checking accounts, savings accounts, and certificates of deposit all come within the CAMPAL definition of “account.” (Prob. Code, § 5122, subd. (a).)
“Words in substantially the following form in a signature card, passbook, contract, or instrument evidencing an account, or words to the same effect,” can create a joint account if “executed before, on, or after July 1, 1990”—“This account or certificate is owned by the named parties. Upon the death of any of them, ownership passes to the survivor(s).” (Prob. Code, § 5203, subd. (a).)
Survivorship interests in multiple-party accounts are governed by section 5302, which reads in relevant part: “[s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party . . . as against the estate of the decedent unless there is clear and convincing evidence of a different intent.” (Prob. Code, § 5302, subd. (a).) No writing is required to create this right. “The right under this part of a surviving party to a joint account . . . to the sums on deposit on the death of a party to a multiple-party account shall not be denied, abridged, or affected because such right has not been created by a writing executed in accordance with the laws of this state prescribing the requirements to effect a valid testamentary disposition of property.” (Prob. Code, § 5304.) Furthermore, section 5302, subdivision (a), “creates a right of survivorship in a joint account whether or not the account is described as a ‘joint tenancy’ or mentions any right of survivorship.”
Under California law, the presumption is that “[s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party . . . as against the estate of the decedent.” (Prob. Code, § 5302, subd. (a).) In order to rebut the presumption, the challenging party has to present clear and convincing evidence of a different intent. As the trial court determined, the challenging party (i.e., the trustee of the decedent's trust) did not satisfy this exacting standard.
As such, the money in the account flowed directly to the surviving joint account holder -- without regard to principles of trust law.
If you have a joint account with someone you need to make sure you understand that if you die, the surviving joint account holder will very likely get the money in the account and that said money will NOT go through probate or be administered via your living trust. If your intention is otherwise, it is best to consult an attorney so that your true intent can be properly memorialized and documented so as to assist your survivors if and when they need to challenge distribution of the account to your surviving joint account holder.