Joint Bank Account Litigation and Pay On Death Disputes

Aging parents often add an adult child to joint accounts to make it easier from them to help manage assets or pay bills. However, this well-intentioned step can lead to unintended consequences in California when the parent passes away. In such cases, the surviving child, as the joint account holder, may receive the entire account proceeds, even if the parent intended them to be distributed differently – for example, to all their children.

In some situations, the ownership of joint bank accounts will be in dispute upon the death of one owner. One owner of a joint account may have improperly transferred funds out of the joint account into another account under their sole control. Under California law, there is a presumption that jointly titled accounts become the property of the survivor upon the death of the first owner.  However, this presumption can be disproven upon sufficient evidence to the contrary. The California Probate Code establishes guidelines for joint accounts, yet the statutory language is not always clear.

In the 2019 case of Placencia v. Strazicich, the Court of Appeal clarified that the paramount factor is the intent of the person who established the account. The surviving account holder’s presumed right of survivorship can be challenged with clear and convincing evidence, allowing for a more equitable distribution among beneficiaries.

The case of Ralph Placencia highlights the complexities. Ralph opened a joint Franklin Fund account with his daughter, Lisa, in 1985, designating her as a joint tenant with the right of survivorship. However, shortly before his death in 2009, Ralph executed a will expressing the specific desire to remove Lisa as the sole beneficiary and designate all three of his daughters instead.

Despite Ralph’s explicit instructions, Lisa, as the surviving account holder, transferred all assets from the joint account to her own, leading to litigation. The key provisions of the California Probate Code, specifically sections 5302 and 5303, played a crucial role in resolving the case.

Section 5302(a) establishes that the surviving account holder inherits the account unless there is “clear and convincing evidence of a different intent.” Section 5303, on the other hand, outlines methods to determine rights of survivorship based on the account’s form at the time of the party’s death. The Placencia court clarified that these sections address different issues, with 5302 focusing on the decedent’s intent and 5303 on the terms of the multi-party account.

Despite section 5302(e) stating that a right of survivorship cannot be changed by a will, the court emphasized that this provision does not prevent a will from serving as evidence of the decedent’s intent. In Ralph’s case, the court upheld the will as evidence that he did not intend for the joint account to pass solely to Lisa.

In summary, a right of survivorship in a joint account is not absolute, and the key is establishing the decedent’s intent. Placencia confirms that clear and convincing evidence, including statements in a will, can successfully challenge the presumed right of survivorship outlined in the California Probate Code.

If you are involved in a dispute over a joint account, please contact Andrew Gold at (650)450-9600.

Andrew Gold, Esq.