By Laura L. Ergood, Esq.
As an Estate Planning Attorney, I have the opportunity to talk to clients about their assets which normally include their house, bank accounts, brokerage accounts, IRAs, 401(k)s, Certificates of Deposits, annuities and life insurance. Most clients do not realize that a Will does not always control how all of these assets will be distributed upon their death.
IRAs, life insurance policies and annuities will be distributed to the named beneficiary on these accounts. So if only one child is named as the beneficiary of these assets and your Will says to divide your estate equally between your three children but the only assets you own are an IRA, life insurance and an annuity, then only the child named as the beneficiary will inherit from the parent. The other two children will receive nothing under the Will because there were no probate assets to distribute under the Will in this scenario.
Often, I see that parents have added one of their children to their bank accounts as a joint owner. Usually, the parent does this to make it easier for the child to help the parent with their banking and bill paying. If the parent has contributed all the money to the account, then the money in the account is the parent’s money during their lifetime. However, upon the parent’s death the money in the joint account will be owned by that child named as the joint account owner. The New Jersey Multiple-Party Deposit Account Act provides there is a rebuttable presumption that a right of survivorship was created for the surviving joint account owner.
The problem is that this may not have been the parent’s intent to leave the account to the one child. The parent believes that their Will divides all their assets equally between their children. The parent’s intent was to have the one child as joint account owner for convenience only. This can result in hard feelings by the other children after the parent dies or worse litigation. The children not named as joint account holders can file a lawsuit to rebut the presumption of survivorship rights on the account. Under New Jersey law, they will just need to establish that the joint account holder (their sibling in this case) had a confidential relationship with the deceased account holder (the parent in this scenario). A parent-child relationship constitutes a confidential relationship. Once established, the burden of proof shifts to the joint account holder child to prove they did not exert undue influence over their parent in becoming named as the joint account owner, that the parent’s intent was to leave them more money than the other children and that this was not just an arrangement for convenience to conduct the parent’s banking.
So, you see how things can get messy rather quickly merely through how you title your accounts and who you name as beneficiaries. The best thing to do is to have a Durable General Power of Attorney prepared and allow the child helping you to use that instead of naming them as a joint account owner. It is also very important to go over all of these issues with an estate planning attorney.
The Law Office of Laura L. Ergood, LLC is available to help you solve these issues. (856) 266-9525; Laura@ergoodlaw.com.