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Joint Accounts - their impact on estate plans

Joint accounts provide many benefits to customers, and it is important that those same customers clearly understand what they’re doing when they set up joint accounts.  Joint accounts can significantly alter a person’s existing estate plan because it is not controlled by a person’s will.  Joint accounts are, therefore, sometimes the focus of contentious estate litigation, which can turn on the circumstances of how the accounts were set up. 

In the most recent reported case in Maine decided at the end of 2010, the beneficiary of a will challenged a series of joint accounts established by a decedent and her sister.  He alleged that the accounts were not intended by the decedent to be joint accounts.  Therefore, the beneficiary argued, the accounts should have become part of the decedent’s estate, which was subject to her will, of which the beneficiary was the sole beneficiary.  The joint accounts were successfully defended on behalf of the sister by William Knowles, a partner with Verrill Dana’s Probate Litigation Group

Maine’s Supreme Judicial Court upheld the joint accounts, relying on evidence from the bank’s records that they were established as joint accounts with a right of survivorship in the sister.  Crucially, regarding whether the decedent actually intended the accounts to be joint accounts, the Court did not find “clear and convincing evidence of a different intention at the time the account was created”.  In other words, the court did not find evidence that she was mistaken, that she did not understand what she was doing, or that she did it at someone else’s insistence.  The will beneficiary’s allegations were not enough to outweigh the evidence that the accounts were intended to be joint.

In this case and in other cases challenging joint accounts, courts will often review a bank’s records of how the account was established.  The original signed account agreement, any language on the agreement about survivorship, and evidence of the bank’s procedures when opening such accounts, are potentially critical.  Courts will often review whether the bank consistently followed its own policies and procedures when establishing accounts with rights of survivorship.  Bank documentation or testimony showing that the customers clearly understood the effect of rights of survivorship on the assets, and that they were not acting under someone else’s influence, may be critical. 

Because joint accounts, and other accounts with rights of survivorship, can have significant impacts on a person’s estate, good records and policies are critical to preserving customers’ intentions.  Being able to clearly remember that one customer from four or five years earlier can be very difficult, however.  Therefore, having a habit and practice that is consistently followed each and every time such accounts are opened will help significantly when questions arise.

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