When Is A Joint Account Not A Joint Account In Texas

Robert Ray

Joint Accounts in Texas

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?

Problem

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.

Facts

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.

12-17-00062-CV.

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.

Ruling

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.

Notes

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.

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The Author

Robert Ray

Robert Ray handles inheritance disputes of all kinds. He takes cases throughout Texas.
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