In my Georgia probate practice, I have had several clients who were left in an uncomfortable predicament during probate due to the deceased’s use of a type of bank account called a joint account. Joint accounts are accounts with multiple owners, usually two. The money in the account is considered the property of the person who contributed the money to the account. However, each joint owner has unfettered access to the funds in the account, and does not need the knowledge or consent of the other owner to conduct transactions on the account. Upon the death of one joint owner, all the funds in the account become the property of the other joint owner. The funds do not pass through probate, meaning they are not considered part of the decedent’s estate to be distributed among the beneficiaries regardless of the instructions left in the deceased’s will, which is where the trouble with joint accounts typically begins.
Other than among spouses, joint accounts are terrible planning tools. It is natural that, upon a person’s death, he or she will want to leave control and ownership of an account to a spouse, and you rarely see litigation against a spouse that was named as a joint owner on a parent’s account (and, if you do, it’s when the spouse is the not the parent of the surviving children). A child expects his parents to own property together, and to pass such property to each other upon death. A child does not expect a parent to pass property to anyone else using joint accounts, especially to the child’s sibling, and the child typically does not find out until after the parent has died. When the child does find out, it is very common for him to feel angry, either because he believes his parent was careless in planning or his sibling schemed to be added to the account. Regardless of the reason, the child will be faced with either walking away from what often is a significant amount of money or suing to undo the joint account status.
Georgia law regarding joint accounts only makes joint account issues worse. The law presumes that a joint account owner intended the surviving joint owner to become the owner of the funds in the account upon the former’s death. As a result, Georgia banks and financial institutions use application forms and signature cards that do not require the account owners to indicate whether they intend the account to include survivorship rights. This leaves no document evidencing the account owner’s actual intention. Such a law protects the bank, not the account owner. Other states such as North Carolina take a more practical approach that protects the account owner (and her heirs) by requiring the joint owner to indicate on the account application or signature card that the account is intended to pass to the surviving owner. Providing a simple check-box on a bank form would resolve a lot of doubts and frustration among estate heirs.
How can an account owner plan better? I would advise any account owner that needs help managing an account to appoint someone such as a child only as a “power of attorney” on the account and not as a joint owner. A “power of attorney” allows the child to conduct transactions on the account on his parent’s behalf but does not grant the child any ownership rights. Upon death, the “power of attorney” disappears, and the account becomes part of the parent’s estate. If a parent does want a child to receive the account balance, the parent should make the account a “pay on death” (POD) or “transfer on death” (TOD) account, and designate the child the beneficiary of the account. As an alternative, the parent can identify the account in her will and state she wants the child to receive the balance of the account. Such planning would create a document trail showing the clear intent of the account owner.
I believe there are three reasons joint account disputes continue to persist: (1) generally, bank customers are not familiar with Georgia law and bank account agreement provisions regarding survivorship rights; (2) parents are unwilling to discuss their estate planning desires with their heirs while living and fail to make their intentions clear in their testamentary documents; and (3) estate planning and other professionals do not educate their clients on the effect of joint accounts and the alternative planning options available (and why those alternatives are superior to using joint accounts in planning).
As a Georgia probate attorney, I have extensive experience with assisting my clients in matters regarding joint accounts. If you have questions about joint accounts or alternatives to joint accounts, or if you are having an issue regarding a deceased’s joint account, please email me or call my Atlanta probate firm at (404) 445-7771.
