Learn about Joint Accounts and Inheritance in Texas

In Texas, joint accounts are accounts, usually with a financial institution, where more than one person has rights to the account.  Deciding what those rights are is a problem often faced in contested probate cases. Are they survivorship accounts where the survivor gets all of the account and the money does not got through a will or probate? Or, are they non-survivorship accounts where the money does not go to the survivor but passes through the will and through probate?

Accounts with community property owned by both spouses are treated differently than accounts between non-spouses (See below.)

The courts look at the documents creating the account and the words used to determine the type of account involved.  Often, the financial institution will use a pre-printed form that has boxes to check.  The card will be filled out correctly but no box will be checked!  Or two conflicting boxes will be checked!  Since all accounts are presumed to be non-survivorship accounts, the burden of proof is on the person claiming that the account is a survivorship account to prove that it is.  If the boxes on the signature card are not checked, too many boxes are checked or as one jury found, checked later by someone not the owner of the account, then the account is not a survivor account and the money goes through probate.  The account would pass through the owner’s will or through his estate. However, the courts are more likely to find that two spouses intended to create joint accounts with right of survivorship than the are likely to find that two non-spouses intended to create such accounts. In other words, the burden of proof on non-spousal accounts is higher than it is on spousal accounts.

Joint accounts can cause difficulties.  The difficulties relate to the type of joint account in question.  There are three basic joint accounts:

1. convenience accounts – where one or more persons own the account but other, non-owners, are allowed to make withdrawals  On the death of the owner, the account passes through his will or through his probate estate and does not pass to the non-owner;
2. tenants in common – where two are more persons own the account equally – when one owner dies, his share passes through his will or through his probate estate and does not pass to the other owner; and
3. joint accounts – with or without the right of survivorship.

• with right of survivorship means that when one of the joint owners dies, the account belongs to the survivor and does not pass through the deceased’s will or through his probate estate.
• without right of survivorship means that the account is owned by the joint owners and when one dies, his share passes through his will or through his probate estate and does not pass to the other owner.

An example of the difficulty with joint accounts are the following cases:

1. One case held that there was no right of survivorship even though the signature card said ” Joint accounts – with survivorship” since the language did not match that required by statute to create a survivorship account;
2. Another case held that there was no right of survivorship because no box had been checked;
3. Signature card said “Type of customer – joint with survivorship” held not a survivorship account; and,
4. “Joint account – payable to either or survivor” was not a survivorship account.

As shown by the cases cited above, accounts with a substantial amount of money in them need to be scrutinized carefully to determine what type of account they are and who, therefore, owns the account.

On my blog, I wrote about a daughter who took over her parents bank account when they added her to the signature card. The father had to sue the daughter over the ownership of the account. You can read the outcome of that case on our blog here.

Note: On June 25, 2009 in Holmes v. Beatty, No. 07-0784, the Texas Supreme Court reversed some of the holdings listed above as they relate to community property between spouses. The Court held it was easier for spouses to create joint accounts with right of survivorship if they used terms like JT TEN, or designated the account as a joint account. The Court said that the difference between a joint account and other accounts is the right of survivorship. Since the husband and wife signed documents that indicated the account was a joint account, it had a right of survivorship. The account went to the survivor rather than through the wills of the husband and wife.

Note: Effective September 1, 2011, the legislature amended the Probate Code with the express purpose of overruling Holmes v. Beatty which is cited below. The changes in the Probate Code should return the law to what is set out above.

Note: In 2011 a Texas Appeals Court held that personal accounts located in Texas were governed by Michigan law based on the facts of the case. In Michigan, unlike in Texas, joint accounts are presumed survivorship accounts even if they do not say they are. Since the documents creating the account were executed in Michigan and subject to Michigan law, they were survivorship accounts even though they would not be if governed by Texas law. This case shows again the necessity of reviewing the documents creating the accounts to determine if they are survivorship accounts. 335 S.W.3d 282. (The legislature passed a law that has the effect of overruling this case. Now, if more than 50% of the nonprobate asset is contributed by a Texas resident, then Texas law will be applied).

Note: 2017. Joint accounts continue to be the focus of lawsuits especially where the original owner of the account is elderly. In a 2017 case, No. 12-17-00062-CV, the appeals court said “In essence, the requirements for the creation of a right of survivorship to a joint account are: 1) a written agreement, 2) signed by the decedent, 3) which specifies that his interest “survives” to the other party.” The court found that part 1 and 2 had been met but part 3 had not been met even thought the account purported to be a joint account. “The only evidence purporting to create a survivorship account is the signature card. On it, in a section labeled “OWNERSHIP OF ACCOUNT — CONSUMER,” the account holder is directed to place his initials next to the account selected. This instruction is followed by a notice that “THE TYPE OF ACCOUNT YOU SELECT MAY DETERMINE HOW PROPERTY PASSES ON YOUR DEATH. YOUR WILL MAY NOT CONTROL THE DISPOSITION OF FUNDS HELD IN SOME OF THE FOLLOWING ACCOUNTS.” Nine options are presented, each with a box next to it to be marked to indicate the choice. The box next to “MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP” is marked with an X, and the initials LDH and LWH are on the blank next to that box. The card is signed by all three account holders.” According to the court, this was insufficient to create a joint account with right of survivorship in Texas.

Note: In a 2019 case, a niece began taking care of her uncle towards the end of his life. She had him add her to his banking accounts and made the accounts joint accounts with the right of survivorship. When the uncle died, she went to another town to a branch of the bank where the uncle had never done business and withdrew all the money. Meanwhile, the court had appointed and administrator over the estate. When the administrator found out about the funds, she sought a temporary injunction against the niece ordering her to return the money. The trial court imposed an injunction against the niece after he heard evidence. The injunction required the niece to return the money to the estate. It would be determined later who would receive the money but for safekeeping pending the case, the funds had to be returned. 12-18-00206-CV