Financial accounts do not go through probate. They are non-probate assets.
The financial institution gives the money directly to the beneficiary named in the account.
Inheritance and Joint Accounts
When an account is set up, correctly, as a joint account with right of survivorship, and when both parties have the mental ability to contract, the bank pays the survivor the funds in the account. But what happens if the joint account is not set up properly?
Texas has strict rules about setting up joint accounts. Just because they are named a “joint account with right of survivorship” doesn’t mean they are recognized as such by Texas courts.
In 1998, L.D. Hare opened a checking account at Austin Bank…he added his son, Larry W. Hare, to the … account.
After a short hearing, the trial court found that the account should pass through probate because the evidence was insufficient to prove that the parties had created a joint account with the right of survivorship.
Rules for Joint Accounts in Texas
The court set out the requirements for joint accounts with right of survivorship.
Ownership of funds held in a multiple party account after the death of a party is determined by statute. 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.
Here, the signature card constitutes a written agreement and it was signed by the decedent…Thus, the first two requirements for creation of a right of survivorship were met.
(T)he signature card is the only evidence presented in support of the existence of a right of survivorship. Although the card includes a notice provision warning that the type of account chosen may affect how property passes upon the death of an account holder, the notice is incomplete.
The signature card indicates an attempt to create a right of survivorship. However, no document was produced in evidence stating that the ownership interest of a deceased joint owner will belong to the surviving parties upon his death. Without such explanatory language, the agreement, whether in the form of a signature card or a different format, fails to confer a right of survivorship upon the surviving party.
Hare did not meet his burden to prove that the joint account holders created a right of survivorship in compliance with the Texas Estates Code.
Based on the facts of the case and applying Texas law, the son did not meet his burden to show that the account was a joint account with right of survivorship. Because the burden was on him and he failed to meet that burden, he lost. The money from the account went to probate. There is no discussion of a will but if the decedent had a will, the money would be distributed according to the will. If there was no will, then it would be distributed according to the laws regarding Texas intestate succession.
The things to take away from this case are that the burden of proof is on the person claiming that the account was a joint account with right of survivorship and that Texas has strict rules involving joint accounts.
The Texas statutes include a form that financial institutions can use but most of them continue to use their own forms which may or may not be sufficient.
Filing an inheritance dispute in the wrong Texas court can be fatal to your claim!
A recent court of appeals decision illustrates what happens when you file an inheritance dispute in the Wrong Texas Court. An elderly Texas man had nine children. In the last few years of his life, one of his children gained control of the man. She obtained a power of (more…)
Everybody knows when you are dead, right? When the question involves when are you dead for probate purposes the answer is not quite so settled. I have written before on this question of when are you dead for probate purposes and those articles are cited at the bottom of this article.
Simultaneous Death Act
The question usually arises because Texas, as most states, has a statute that deals with survivorship when two people die around the same time. In Texas, if you die within 120 hours of another person you are presumed to have died at the same time. Usually when these statutes are invoked, the issue involves close family members like a husband and wife. If the husband and wife die close together in time, the state doesn’t want to require the children to have to file an estate for the father and then put his money into the mother’s estate and then open an estate for the mother and put her money into the estate of the father and then…. you can see the point. The issue is also important in joint accounts with right of survivorship. If the joint owners die close together, what happens to the money. The Simultaneous Death Act resolves that problem. One final issue is what happens when a will speaks to what happenes to the property if the testator and the main beneficiary die in a common disaster. Common disaster means (“[a]n event that causes two or more persons [with related property interests] . . . to die at very nearly the same time, with no way of determining the order of their deaths.”) This last issue relating to the definition of common disaster was the subject of a 2016 case out of the Texas Supreme Court. NO. 14-0406 consolidated with NO. 14-0407.
A husband murdered his wife at 8:59 PM and then shortly thereafter at 10:55 PM killed himself. They had nearly identical wills with provisions relating to what happens to their estate if they died in a “common disaster.” The issue before the court was whether or not these two people died in a common disaster? The trial court had ruled that they did die in a common disaster. The Court of Appeals agreed holding that the homicide-suicide was “a common disaster in spite of the fact that husband did not successfully kill himself immediately” because the shots that killed the husband and wife “were fired in one episode.” The Supreme Court however disagreed and ruled that the husband and wife did not die in a common disaster.
Construing A Will
The Supreme Court said that this was a case of construing a will, plain and simple. While the trial court and the Court of Appeals had discussed the Texas Simultaneous Death Act, the Supreme Court said that that act did not apply because the wills addressed the situation and had to be followed. The court stated that common disaster has a settled legal meaning. One of the requirements is that the order of death must be uncertain. In the case under review, there was no uncertainty as to the order of death. Common disaster fails to encompass unrelated but closely timed deaths. Therefore the doctrine of common disaster did not apply in this case. The provisions in the will dealing with what happens to the property if the husband and wife die in a common disaster never become effective.
Undue influence is one of the harder things to provein an inheritance dispute. The doctrine of undue influence derives from English courts. A will contest heard by Sir Francis Bacon as the Lord Chancellor of England in 1617 illustrates common aspects of the process of undue influence which emerged in the context of a will contest. These aspects include frail health, physical dependency, false affection, relationship poisoning, threats and mistreatment, and involvement in the execution of documents by and in favor of the alleged abuser.
Relationship poisoning and undue influence.
What is relationship poisoning in the context of a will contest? A Texas court held that when a person makes negative remarks about a person’s children and reinterprets historical events in a negative manner, the jury can consider these acts as relationship poisoning. Based on the relationship poisoning, the jury can find undue influence and the verdict will be upheld. 340 SW 3d 769. While relationship poisoning alone may or may not be sufficient proof of undue influence, if it has occurred it needs to be brought to the attention of the court because it will assist the court in determining if undue influence has occurred.
When someone is found to have breached a duty, a large judgment can be rendered against them. If they can’t afford to pay the judgment, they can file for bankruptcy and ask that the judgment be discharged meaning that they don’t have to pay it. There are some exceptions to this when dealing with fiduciaries. The bankruptcy code specifically prohibits the discharge of a judgment if the judgment is for breach of fiduciary duty. In March, 2013, the Supreme Court of the United States was asked to interpret that provision of the bankruptcy code. In the case before the court, a brother had breached his fiduciary duty as found by a state court but all the monies had been paid back into the trust and the brother did not breach is duty intentionally or with knowledge that his actions were a breach of his duties. The Supreme Court held that in order to deny a discharge of a fiduciary, the judgment must be related to intentional bad conduct by the fiduciary. They held that in the case before it, since the brother did not intentionally breach his duty, the money had been repaid and there was no malice involved, the judgment against him for breach of his fiduciary duty could be discharged in bankruptcy. No. 11-1518.
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.