Nipp v. Broumley, 285 S.W.3d 552 (Tex. App.—Waco 2009, no pet.).

Other Estate Planning Matters

Joint Accounts

 

Decedent, using her own funds, opened certificates of deposit in the form “Decedent or Son.” Shortly before Decedent’s death as she was entering hospice, Son cashed three CDs worth approximately $76,000. Daughter claimed that the CDs were part of their mother’s (Decedent’s) estate. The trial court held that Son owned the funds in the CD because Son had the right to withdraw the funds.

The appellate court reversed. The court explained the right to withdraw is very different from ownership rights. Each party to a joint account has the right to withdraw the funds under Probate Code § 445. However, ownership of account funds is based on a party’s net contributions under Probate Code § 438(a) unless there is clear and convincing evidence to the contrary.

Son claimed that Decedent had made a gift of the CDs to him during her lifetime. The court examined the basic elements of an inter vivos gift (present donative intent, delivery, and acceptance) and determined that Decedent did not have the intent to make a gift of the funds even though she allowed Son to use the CDs as collateral for loans. Decedent retained control over the CDs, keeping them in a lock box in her home until Son took them just days before her death, and never allowed Son to withdraw any of the funds.

Moral: A person opening a joint account must be very certain to trust the other party because regardless who owns the funds in the account, any party can withdraw all of the funds.



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