Money on deposit in bank or brokerage accounts that are titled as “Joint Tenancy With Right of Survivorship” (“Joint Tenancy Account”) passes automatically at the death of a deceased joint tenant to the surviving joint tenant(s), if any, by operation of law; or does it?
Many times the money is deposited by one account holder only — often an elderly parent or a dependent spouse. The other joint tenant is added so that they can manage and use the account on behalf of the person who contributed the money.
In California, section 5302(a) of the Probate Code provides that, “(a) Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent.”
Section 5302 (e) provides that, “A right of survivorship arising from the express terms of the [joint tenancy] account or under this section, a beneficiary designation in a Totten trust account, or a P.O.D. payee designation, cannot be changed by will.”
Section 5303 of the Probate Code, however, provides that a joint tenancy account can be changed in any of four ways; none of which involves a will.
Until now, I always understood that a decedent’s will had no relevance to a decedent’s joint tenancy bank account when there are surviving joint tenant(s). That is, unless the joint tenants died simultaneously the will of a deceased joint tenant was not relevant.
Recently, in Placencia v. Strazicich (2019) 42 CA 5th 730, however, California’s Fourth District Court of Appeals decided that the will of a deceased joint tenant can be used as “clear and convincing evidence of a different intent” to negate the right of survivorship, notwithstanding sections 5302 and 5303 (see above).
In Placencia v. Strazicich, a father named Ralph opened a joint Franklin Fund account with Lisa, one of his daughters. Afterwards, Ralph executed a will (11 days prior to his death) in which he said, “Remove Lisa Strazicich as sole beneficiary of my Franklin Fund. I want the beneficiaries to be Lisa Strazicich, Stephanie A. Placencia and Tina R. Placencia, … I want the Franklin Fund to be placed into my trust and then be used to pay off the mortgage curt of my home … .” After Ralph died, Lisa retitled the money in the account into her own name for herself alone.
The Court examined Probate Code sections 5302 and 5303 and decided that although the will could not change the right of survivorship it could nonetheless provide clear and convincing evidence of intent to negate the right of survivorship. Having thus negated Lisa’s right of survivorship, the court then decided that, “… arguably, therefore, upon Ralph’s death, his interest in the Franklin Fund account became part of his personal estate, which would need to be probated.”
In Placencia v. Strazicich, the Court of Appeals bent over backwards to give effect to the decedent’s intent even though the statute says that a joint tenancy cannot be changed by a will. The Court justified its sleight of hand based on “… the modern trend in the law favoring the decedent’s intent over [legal] formalities”.
The foregoing legal authority is a California appellate court decision. As such, it is only binding in the Fourth District (certain counties including San Diego) and is not binding statewide. Eventually the California Supreme Court may get the opportunity to decide whether the same approach should become the law of California.
Dennis A. Fordham, Attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at dennis@DennisFordhamLaw.com and 707-263-3235.