On January 1, 2013, important amendments to California’s law governing “Multiple Party Accounts,” including Joint Tenancy Accounts, took effect.  Let us examine how the amendments protect joint tenants from excessive withdrawals by their other joint tenants.  

          Generally, while all original parties to a multiple account are alive, each party’s ownership is based on that party’s own net contributions (deposits less withdrawals).  Also, on a party’s death, any life insurance deposited to the account due to that party’s death increases his net contributions.

For example, consider a joint tenancy account opened by an adult college student with his parents to pay college related expenses.  The parents contribute $10,000 of their own community property earnings and the child contributes his $5,000 student loan. 

The parents own two-thirds (2/3) of the account and the student owns one-third (1/3).  As the student withdraws money, his ownership decreases until he withdraws all of his $5,000 contribution.  Subsequent withdrawals are presumed to involve the parents’ contribution, except where there is clear and convincing evidence to the contrary.

Here the parents gave $10,000 to help son pay his college related expenses.  Provided he used the money for such expenses it is consistent with the parents’ intentions, and they would not have any right to reimbursement.  What, however, if the college student used some of the parents’ $10,000 for any of a multitude of unintended reasons? 

Then the parents might arguably be entitled to reimbursement of any of their misspent monies.  Further examination is required.  If son paid emergency medical expenses for which the parents would otherwise be held responsible then a court at its discretion might reduce or eliminate the parents’ claim.

Next, consider a co-habiting unmarried couple who open a joint tenancy account to pay shared living expenses.   Later, if they separate and one withdraws more than his/her net contributions then the other is entitled to reimbursement.  This is new.  Previously, one joint tenant could lawfully empty the entire joint account to the detriment of the other(s).

Next consider what happens when a party to a multiple party account dies.  Each surviving party retains his proportionate share in the account and also inherits an equal share of the deceased party’s proportionate share, all as computed at the party’s death.  That is longstanding law.

With a joint account with right of survivorship, any money withdrawn while still alive by a now deceased joint tenant is not subject to the surviving joint tenant(s)’s right of survivorship; thus, the deceased tenant while alive can withdraw and transfer his net contributions into a separate account in his name alone and defeat the surviving joint tenant’s expectation of inheritance.

Now, under the amended law, the surviving joint tenant receives some protection.  That is, if the deceased tenant’s lifetime withdrawal(s) exceeds his net contributions then the surviving joint tenant has a right for reimbursement of the excess withdrawal (which depleted the surviving joint tenant(s)’s contributions).   Previously the survivor would simply be out of luck. 

Returning to the unmarried couple example, hypothetically speaking if one party withdrew $6,000 from say his/her $10,000 in net contributions and died, the survivor would receive the remaining $4,000 in the account contributed by the deceased tenant — in addition of course to the surviving party’s own net contributions on deposit — but has no rights to the withdrawn $6,000. 

If instead the deceased tenant withdrew more than his $10,000 net contribution, however, then under amended law the survivor has a right to the excess amount against the decedent’s estate. 

Lastly, California’s community property laws also come into play here when married joint tenants are concerned.  In all cases, persons should consult an attorney before reaching any conclusions regarding their legal rights discussed herein.



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