Joint Accounts with Mom – Whose Money Is It?

a-question-of-money-250x300Theme: Joint bank accounts can have totally unintended and unforeseen consequences because most joint bank accounts aren’t controlled by the will.

Legal: Most joint bank accounts in Texas are actually “joint tenancy with right of survivorship” accounts (“survivorship accounts”).  If the account is a survivorship account and one person on the account dies, the other person(s) on the account own the money in the account.  The will of the deceased person does not control a survivorship account; the account is owned by the survivor(s), regardless of what the will said about division of assets.

Facts: Summary; Junior owns the money in the account despite Dad’s will saying divide the estate among all three children.

The title of this article refers to accounts with “Mom” but everything applies equally to “Dad”, as you’ll see in this case.  Early in my legal career Susan hired me to probate her father’s will.  Susan was from Bowie, Texas, and I think about this case every time I drive up Highway 287 and pass through Bowie.  Susan’s father lived in Fort Worth and he had three children; Susan, the eldest, lived in Bowie; Junior, the middle child, in Fort Worth; Richard, the youngest, in Dallas.  Dad’s will said, “divide everything equally among my three children”.  Susan and I went to probate court and the judge declared Dad’s will to be valid and then appointed Susan independent executor per Dad’s will.  Dad’s assets consisted of a house worth about $50,000, old furniture, an old car and his checking account with $400,000 in it.  Back then the FDIC insurance limit was $100,000 and Dad normally spread his money among about five different banks, in certificates of deposit (“CD”) of about $80,000 each.    Dad, like a lot of older people, had put one person on his checking account, Junior, because Junior lived in Fort Worth and it was convenient to have someone else on the account.  Normally, Dad kept about $5,000 in his checking account.

Dad, also like a lot of older people, was always shopping around for the best interest rates on CDs.  Unfortunately for Susan and Richard, but fortunately for Junior, Dad’s different CDs all matured about the same time and Dad moved the money into his checking account temporarily while he shopped for CDs.  Then, Dad suddenly died with the entire $400,000 still in his checking account.  When Susan hired me she told me Junior was now claiming the $400,000 was his and wasn’t going to be divided according to the will.  In my inexperience I thought that couldn’t be right; the will was very clear, “divide everything equally among my three children”; but then I read Texas Probate Code §439 and cases about “joint tenancy with right of survivorship” accounts.  I instructed Susan to go the bank to obtain the signature card for the checking account and, after examining the signature card and verifying the signature card met the requirements of §439, I had the extremely unpleasant task of telling Susan that Junior was absolutely right.  The account was joint tenancy with right of survivorship, Junior and Dad were on the account, Dad died and Junior was the survivor so Junior owned the full $400,000.  Dad’s will did not control the survivorship account.  Also, Junior didn’t have to use the $400,000 to pay for Dad’s funeral or help pay any of Dad’s bills; the survivorship account wasn’t an estate asset subject to Dad’s debts.

So, whose name is on your mom’s accounts with mom and is that what your mother really intends?  As I said above, most joint bank accounts in Texas are survivorship accounts and survivorship accounts aren’t controlled by the will.  An experienced and knowledgeable estate planning attorney can examine the signature card and account agreement for each of mom’s bank accounts and advise mom about how the money in the account(s) will pass upon her death.

In the next segment of the continuing story of “Joint Accounts with Mom – Whose Money Is It?”, I’ll explain other unintended and unforeseen consequences of survivorship accounts.  In later segments, I’ll recommend solutions to avoid these consequences.