In what I consider a strange holding, the Texas Supreme Court ruledin 2015 that when a Texas bank gives money to the wrong person, the bank may not be liable.
Facts
The case dealt with a joint account with right of survivorship. A husband and wife opened the account. The account was a joint account with right of survivorship meaning that when one died, the survivor owned the account. The account also had a pay on death clause that paid themoney to two people equally when the last of husband or wife died. When the bank heard that the husband died, they issued a check to the two pay on death beneficiaries instead of leaving the money in the account under the wife’s name. One of the pay on death beneficiaries (first) kept the money. The other one (second) put the money into an account for the wife. He also had a power of attorney for wife and demanded that the bank reimburse the wife for the money that had gone to the first one. The bank admitted the mistake and attempted, unsuccessfully, to get the money back from the first one. After the wife died, the executor of her estate (second) filed suit against the bank.
No Damages
A jury found that the bank breached its duty to wife but found that the wife suffered no damages. The trial court entered a judgment against the bank for the full amount given to the first one, called judgment notwithstanding the verdict, JNOV. The court of appeals upheld the judge’s JNOV. However, when the case went to the supreme court, they overturned it. The supreme court ruled that the estate suffered no damage because the one half of the original account would have gone to the first one if no changes had been made! This doesn’t address the issue of what would happen if the wife had all the money and decided to spend it or to put it into another account (as she had done after the funds were disbursed.) I don’t understand how the bank is not liable for giving depositor’s money away. There was no discussion of any constraint on the wife to use that money, to give it to someone else or to just go to Las Vegas and blow it. It was wife’s money! How could giving it to someone else not cause damages!
The only way to justify this case is that the two pay on death beneficiaries were not relatives of the husband and wife and that if the bank had paid the money back to wife, it would have ended up in the account opened by the second beneficiary after the fact and he would get all of the money. There is no discussion of these issues or what the wife’s wishes were. There is a brief mention of a guardian for wife but not discussion of what wife wanted done with the money.
Financial accounts like checking accounts, savings accounts, C.D.’s and retirement accounts are non probate assets. That means that a person’s will does not control who gets the funds. The beneficiary designation on those accounts determine who gets the funds. They do not pass through probate. The same is true of joint accounts with right of survivorship.
Pay On Death Beneficiary Designation
Owners of the financial accounts sign a Pay On Death Beneficiary Designation form POD. The person designated as (more…)
In a posting on the World Bank’s blog, there is an article that points out that wives and daughters don’t have the same inheritance rights as husbands and sons in developing countries. In those countries, ownership of land is important and keeping that land in production benefits the whole economic climate. However, since women’s inheritance rights are limited, women may not be willing to put in the work necessary to keep the land in production. Their rights are often temporary rather than permanent. The article suggest that changes in inheritance laws will produce a range of socioeconomic improvements in those countries.
Copyright by Robert Ray a Texas inheritance attorney. The foregoing information is general in nature and does not apply to every fact situation. If you are concerned about inheritance laws, inheritance rights, have a family inheritance dispute, a property dispute or want information about contesting a will and need an inheritance lawyer, we can help. Please go to our main site www.texasinheritance.com and use the contact form to contact us today. We are Texas inheritance lawyers and would love to learn about your case and there is no fee for the initial consultation.
In two recent cases in the San Antonio area, the Texas Supreme Court was asked to decide if two banks were required to return money to an estate that the banks had paid out to a person with fraudulent papers. The facts were that a former county employee who worked in the probate section of the county clerk’s office stole a stamp that the clerk used to stamp Letters Testamentary or Letters of Administration. When the employee would learn that someone had died intestate, he would prepare forged Letters of Administration and seal them with the stolen seal. The forged documents listed the employee as the duly appointed Administrator of the estate. He would then go the the bank, present his letters and gain control of the accounts.
In both cases, the Supreme Court held that the banks were liable to the estates if the estates took prompt action. The Court ruled for the bank in one of the cases and for the estate in the other. The rulings were based on procedural matters rather than the obligations of the bank to return the money. The Court explained the obligation that the bank has to the estate to return the money to the estate even if the bank was also a victim of a fraud. Because the Court decided both of the cases on procedural matters and how quickly claims were made against the banks, it is important that an estate take action as soon as it is aware of any suspicious activities involving the estate’s bank accounts. 08-0908, Federal Deposit Insurance Corp. v. Christa C. Lenk
Copyright by Robert Ray a Texas inheritance attorney. The foregoing information is general in nature and does not apply to every fact situation. If you are concerned about inheritance laws, inheritance rights, have a family inheritance dispute, a property dispute or want information about contesting a will and need an inheritance lawyer, we can help. Please go to our main site www.texasinheritance.com and use the contact form to contact us today. We are Texas inheritance lawyers and would love to learn about your case and there is no fee for the initial consultation.
