Wednesday, April 12, 2017

New Jersey Probate & Estate Litigation: Who is Entitled to the Joint Bank Account?

Unfortunately, disputes regarding joint bank accounts are very common in New Jersey estate litigation. Oftentimes, joint accounts will be established with an elderly parent for convenience purposes or a joint account will be created with a “right of survivorship” in an effort to make a testamentary disposition (a “poor man’s Will”). Most people, however, fail to understand the significance of jointly owning a bank account or the rights of the surviving owner upon the death of the other owner of the account – this misunderstanding of the law will often result in estate litigation.

Pursuant to New Jersey statute, during the lifetime of all parties, a joint account ordinarily belongs to the parties in proportion to the net contributions by each to the sums on deposit; however, in the event that a contrary intent is manifested by the terms of the contract or deposit agreement, or there is clear and convincing evidence of a different intent at the time the account is created, this presumption may be rebutted. But who is entitled to the funds in the joint account upon the death of the other owner?

Generally, pursuant to New Jersey statute, there is a presumption of survivorship on joint bank accounts – upon the death of one of the account owners, the funds in the joint account will belong to the surviving owner unless there is clear and convincing evidence of a different intention at the time the account was created. As defined by statute, an “account” means a contract of deposit of funds between a depositor and a financial institution, and includes checking accounts, savings accounts, certificates of deposit, share accounts, and other like arrangements.

In a fairly recent published opinion concerning litigation over joint accounts, Estate of Ostlund v. Ostlund, 391 N.J. Super. 390 (App. Div. 2007), the Appellate Division considered an estate’s right to funds held jointly in an account between the decedent and her son. The Court reiterated that, when the Mutli-Party Deposit Account Act governs the right of survivorship, the funds will belong to the joint owner upon death unless there is clear and convincing evidence of a different intent at the time the account was created. Interestingly, in assessing whether the account should be deemed an estate asset, the Court also analyzed whether undue influence had been exercised in regards to the creation of the account.

It is important to note that, even if a joint owner is entitled to a joint account upon the death of the other owner, if other assets of the estate are insufficient, those funds may be deemed available to satisfy debts, taxes, and expenses of administration. Therefore, it is essential that any action regarding funds in a joint bank account be carefully considered. It is also important to note that, in most cases, a proper estate plan and a properly executed power of attorney document will help to avoid a later dispute as to joint accounts.

Because estate litigation and Will contests require specialized knowledge, you may wish to consult with an experienced attorney if you have questions regarding your inheritance, a loved one’s or your own Last Will and Testament, the probate process, administration of an estate or trust, the elective share of a surviving spouse, fiduciary obligations, preparation of a formal or informal accounting, powers of attorney, refunding bonds and releases, undue influence, and the procedures for filing a formal accounting or exceptions thereto. This article is for information purposes only, and is neither legal advice nor the creation of an attorney client relationship.
Justin M. Smigelsky, Esq. /  Timothy J. Little, P.C.  –  2017  –  All Rights Reserved

Timothy J. Little, P.C. is a full-service law firm with offices in Woodbridge and Chesterfield, New Jersey. Timothy J. Little, P.C. represents individuals, families, and businesses throughout New Jersey including Middlesex County (Old Bridge, Woodbridge, Sayreville, East Brunswick, Spotswood, Perth Amboy, Dunellen, Colonia, Sewaren, Iselin, Avenel, Fords, Keasbey, Menlo Park, Port Reading, South Amboy, Monroe Township, Edison, Carteret, Cranbury, Helmetta, South River, Milltown, Highland Park, Jamesburg, Laurence Harbor), Monmouth County (Aberdeen, Matawan, Hazlet, Holmdel, Cliffwood Beach, Keyport, Keansburg, Middletown, Lincroft, Manalapan, Englishtown, Marlboro, Freehold, Howell), Union County (Rahway, Elizabeth), Ocean County (Jackson, Point Pleasant, Brick, Toms River), Somerset County, and Burlington County (Chesterfield).

Probate / Estate Practice Areas: Drafting of Wills and Trusts, appointment and removal of fiduciaries, probate procedures, intestacy, fiduciary duties and obligations, fiduciary accountings and exceptions, fiduciary compensation, marshaling of assets, insolvency petitions, will contests and disputes, caveats, the elective share, undue influence, Power of Attorney abuse, ejectment and eviction, Refunding Bonds and Releases, New Jersey Transfer Inheritance Tax (IT-R), New Jersey Estate Tax (IT-Estate)

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