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June 27, 2019

Who Receives the Funds in a Joint Bank Account When One Co-Owner Dies?

When a bank account is titled in the name of two current co-owners, and one of the co-owners dies, then Michigan statute (MCL 487.703) creates a presumption that the deceased co-owner intended the surviving co-owner to receive sole ownership of all account funds at the death of the first co-owner. However, this presumption may be overcome by clear evidence that the deceased co-owner did not intend the surviving co-owner to receive the account funds.
 
These principles were applied in In re Estate of Martin Langer, 2019 WL 2438913, Docket No. 342816 (Mich. Ct. App. June 11, 2019) (unpublished). At Martin’s death, his bank accounts were titled in joint name with his niece, Theresa, who claimed sole ownership of the account funds. The personal representative of Martin’s estate also claimed ownership of the funds, alleging that Martin did not intend Theresa to receive sole ownership of the accounts at his death. The probate court ruled for Martin’s estate, directing the bank to distribute the account funds to the personal representative. Theresa appealed.
 
The Michigan Court of Appeals reviewed the evidence admitted at the probate court trial. Family members testified that they were present when Martin gave instructions for filling out a will form printed off the internet, designating his three siblings as the equal beneficiaries. At the same time, Martin expressed a desire to designate niece Theresa as his agent under durable power of attorney, but she was reluctant to agree until she talked to an attorney. Martin’s brother suggested that Martin could instead add Theresa to his bank accounts as a “convenience signer,” in the event she needed to manage Martin’s finances for him. The group went to the bank, where Martin executed his will. Martin and Theresa signed new signature cards for all of Martin’s bank accounts, which designated Theresa as a full co-owner of the accounts. Contrary to the family testimony, the bank representative who assisted Martin testified that the purpose of the new signature cards was to make Theresa a full co-owner of the accounts, with survivorship rights.
 
The Court of Appeals recognized that there was conflicting evidence. The bank representative’s testimony and the form of the signature cards was evidence that Martin intended Theresa to inherit the accounts at his death as a full co-owner. The family members’ testimony was evidence that Martin did not intend Theresa to be a true co-owner but only a signer for his convenience. Nonetheless, the Court of Appeals affirmed the probate court’s ruling, noting that the probate court was in the best position to judge the credibility of the witnesses.
 
What is to be learned from this case? Banks use standardized forms to add joint owners to accounts. Often, those forms are not designed to accommodate a “convenience signer.” As a result, it is not uncommon for there to be confusion or disagreement as to the reason why the original account owner added the second person’s name to the account. It would have been preferable for Martin to use a durable power of attorney, if that is what he wanted to accomplish. Additionally, this lawsuit probably would not have been necessary if Martin had paid an attorney to put his estate-planning intentions in writing. He avoided the lesser expense of paying an estate-planning attorney, but his survivors and estate incurred the greater expense of litigating his intentions all the way to the Michigan Court of Appeals.
 
If you need assistance with a probate court matter, please contact Warner attorneys David Skidmore (dskidmore@wnj.com) or Laura Morris (lmorris@wnj.com).

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