Joint Bank Accounts in Probate Court

Well-intentioned family members often add a loved one to their bank accounts. There are a variety of reasons this may occur: shared expenses, planning for final expenses, long-term care concerns, or a potential for future incapacity. In many of these instances, one individual contributes most or all of the funds to the account. After death, the question then arises among family members and heirs as to whether these funds are part of the decedent’s estate or pass directly to the other person named on the account.

Here’s the typical scenario we see: Dad passed several years ago. Mom has three children but only one of them lives nearby. Mom adds the local child (Child A) on her checking and savings account so that Child A can help make sure the bills get paid, handle the account during her absence or illness and then “do the right thing” when she dies. Child B and C are aware of the arrangement but have been told by mom and Child A that this is just for convenience. At Mom’s death, Child A goes to the bank and personally claims all of the funds and declares they are hers as joint owner of the account. The funds comprise the bulk of mom’s estate which was to be divided equally. An argument and threats of litigation begin . . .

In this scenario, it is important to remember that bank accounts are ultimately governed by the account agreement with the financial institution. They should always be your first stop when trying to determine the true ownership of your accounts (when setting up this type of arrangement) or the first stop for a Personal Representative trying to determine whether or not these funds belong to the estate.

​The account agreements at many financial institutions now provide that multiple owner accounts are owned as joint tenants with rights of survivorship. You may recall we previously discussed the two types of joint property ownership in South Carolina. As a quick recap, owning property as joint tenants with right of survivorship (a mouthful but a useful tool in estate planning) gives each joint owner an equal interest in the property. At the death of the first joint owner (mom in our scenario), their share belongs equally to the surviving joint owner(s) automatically (Child A). Therefore, Child B and C would not have access to these funds nor would the Probate Court have jurisdiction over them as they are a non-probate asset.

In researching this post, we reviewed the consumer account agreements at several major banks. All provided for ownership of joint accounts as joint tenants with the right of survivorship as the default (or sometimes only) option. Again, this means that these assets pass directly to the other person whose name appears on the account, and are NOT an asset of the estate. The result is that accounts are opened with rights of survivorship even when that may not be the intent of the original account holder.

In addition to the account agreement, recent amendments to the South Carolina Probate Code provide a general set of rules to apply in these situations. The Probate Code’s default rule for accounts with multiple owners is also to consider them joint ownership with right of survivorship.

So what does this mean for the estate? Unfortunately, the answer is: it depends. Most likely, the account belongs to the surviving joint owner unless the designation on the account agreement indicates a different result.

​If a dispute has arisen as to ownership of a decedent’s account, consultation with an experienced probate attorney may be helpful. Despite these rules, sufficient evidence of a different intent by the Decedent may be able to reverse this outcome. More importantly, we suggest our estate planning clients be aware of these rules when deciding whether or not to create joint accounts or how much funds to place in them.