Many elderly people utilize joint bank accounts as a means to have a child or other person assist them in writing checks and taking care of their banking needs. Sometimes the joint bank account is used in lieu of a power of attorney. In many instances the joint bank account is used as a matter of convenience and was never meant to be a substitute for a will. Unfortunately, there is a lot of abuse with regard to the opening and use of joint bank accounts and much care should be taken before opening a joint bank account that is meant for convenience purposes only.
In New Jersey there is a statute that governs the disposition of a joint bank account. Pursuant to N.J.S.A. 17:16I-5(a), the sums in the joint bank account are assumed to be the property of the surviving account holder “unless there is clear and convincing evidence of a different intention at the time the account is created.”
However, when reviewing a jointly titled bank account, the presumption of legal entitlement by the surviving joint account holder is rebuttable. In re Estate of Penna, 322 N.J. Super. 417, 422 (App. Div. 1999). The burden of proof in N.J.S.A. 17:161-5(a) is modified when the plaintiff “can prove by a preponderance of the evidence that the survivor had a confidential relationship with the donor who established the account.” Estate of Ostland v. Ostland, 391 N.J. Super. 390, 401 (2007). In that case, “there is a presumption of undue influence,” and the burden shifts and “the survivor donee must rebut [the presumption] by clear and convincing evidence.” Id. If a donee introduces evidence to try to overcome this presumption, the party challenging the joint account designation may introduce additional evidence of undue influence to defeat the statutory presumption of survivorship. Penna, supra, 322 N.J Super. At 426.
A confidential relationship between an elderly individual and the party named as the joint bank account holder arises “where trust is reposed by reason of the testator’s weakness or dependence or where the parties occupied relations in which reliance is naturally inspired or in fact exists.” In re Hopper’s Estate, 9 N.J. 280, 282 (1952). Common confidential relations may include guardian, power of attorney, partner, business agent, business associate, legal counsel, medical adviser, physician, nurse and spiritual advisor. A child can also be considered to have a confidential relationship with the parent in the situation where the parent is dependent on the child for purposes of food, shelter or transportation.
Joint bank accounts are considered by the law to be an inter vivos transfer, i.e., a transfer during lifetime, as opposed to a testamentary transfer that occurs after someone dies. The presumption of undue influence in an inter vivos transaction is more easily raised than that affecting wills, because one is not likely to give away inter vivos what he/she still can enjoy. Where the inter vivos presumption arises, the burden rests on the donee to prove not only that no undue influence or deception was practiced, but also that all was fair, open and voluntary, and that the transaction was well understood.
Thus, if an elderly individual opens a joint bank account with another person, in order to protect the elderly individual, it is important that he or she be given counsel as to the various types of bank accounts and possibly the use of a power of attorney in lieu of a joint bank account. The power of attorney can have specific language that the attorney-in-fact is prohibited from making gifts to himself. If this is not done, the joint bank account holder will argue that the account was a gift and as the survivor he/she is entitled to the entire account despite never contributing to the account.
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