The Account That Did Not Follow the Will
A common pattern in Surrogate’s Court looks like this. An elderly parent’s will divides everything equally among three children. Years earlier, the parent added the child who lived nearby to a bank account so that child could pay bills. When the parent dies, the bank pays the entire balance to that child as surviving joint owner.
If the account was the largest asset, the will’s equal division now means very little. The other children ask whether the account really belonged to their sibling or was only a convenience arrangement that should come back into the estate.
New York answers that question through a statutory presumption, a substantial burden on the challenger, and a fact-intensive inquiry into what the depositor intended.
The Banking Law § 675 Presumption
Banking Law § 675(a) provides that when a deposit is made in the names of two persons, payable to either or the survivor, the deposit becomes the property of those persons as joint tenants.
Section 675(b) adds the key evidentiary rule. Making a deposit in that form, in the absence of fraud or undue influence, is prima facie evidence of an intention to create a joint tenancy with a right of survivorship. The statute places the burden of proof on the person challenging the survivor’s title.
In practice, the surviving joint owner starts with the advantage. The account paperwork itself supports the claim, and the estate or the other beneficiaries must come forward with proof to overcome it.
How the Presumption Is Rebutted
New York appellate courts have described what a challenger must show. In Matter of Yaros, 90 AD3d 1063 (2d Dept 2011), the Second Department explained that the presumption may be rebutted by direct proof that no joint tenancy was intended or by substantial circumstantial proof that the account was opened for convenience only.
The Fourth Department, in Matter of Costantino, 31 AD3d 1097 (4th Dept 2006), described the required circumstantial proof as clear and convincing. In that case, the challenger did not meet the burden.
Yaros illustrates the kind of facts that matter. The decedent was the sole depositor. The other named owner never withdrew funds. The account required both signatures for any withdrawal. And a joint account with survivorship would have departed substantially from the decedent’s expressed estate plan. Even so, the surviving owner raised a triable issue through testimony from a bank employee, so the case could not be resolved on summary judgment.
Fraud, Undue Influence, and Capacity
The statute itself carves out fraud and undue influence. A challenger may also argue that the depositor lacked the capacity to create a joint account when it was opened or changed.
These claims draw on the same kinds of evidence used in will contests: the depositor’s health and dependence, who arranged the bank visit, who benefited, and whether the change was consistent with long-held intentions. Our posts on undue influence in New York will contests and testamentary capacity discuss those standards in the probate setting.
Timing matters. An account opened decades ago by a healthy parent stands on different footing from one converted to joint form weeks before death, when the new co-owner was managing the parent’s affairs.
Convenience Accounts Under Banking Law § 678
New York provides a separate account form for exactly the situation many families intend. Under Banking Law § 678, a convenience account is opened in the names of the depositor and another person, payable to either for the convenience of the depositor.
The statute provides that the deposit does not transfer ownership and that the other person has no right of survivorship. When the depositor dies, the balance belongs to the depositor’s estate.
If the bank records show a properly designated convenience account, the survivorship argument largely disappears. If the records show a joint account with survivorship, the family’s understanding that it was “just for convenience” must be proven against the § 675 presumption.
Agents Under a Power of Attorney
A related problem arises when an agent under a power of attorney adds himself or herself as a joint owner, or changes the account’s form. That is not a question of the depositor’s own intent at all; it is a question of the agent’s authority and duty of loyalty. Our post on what an agent can and cannot transfer addresses the limits on gifts made under a New York power of attorney.
Lifetime Withdrawals Are a Separate Issue
The § 675 presumption concerns survivorship. A co-owner’s withdrawals during the depositor’s lifetime can raise different claims, particularly where the co-owner contributed nothing and took funds for personal use. Those claims should be analyzed separately from the question of who owns the balance at death.
How These Disputes Reach Court
An executor or administrator who believes account funds belong to the estate can seek to recover them. SCPA 2103 permits a fiduciary to inquire into and recover property that belongs to the estate but is held by another. Our post on SCPA 2103 turnover proceedings explains the process.
When the surviving joint owner is also the fiduciary, other beneficiaries may need to press the issue through an accounting or by seeking appropriate relief in Surrogate’s Court. Objections to an accounting that omits the account are a common vehicle.
Evidence often comes from bank records: signature cards, account agreements, deposit and withdrawal history, and bank-employee testimony. Testimony about conversations with the decedent may be limited by the Dead Man’s Statute, CPLR 4519.
Practical Points for Both Sides
For challengers:
- Obtain the account-opening documents and every later change, not just recent statements.
- Trace who deposited the money and who withdrew it.
- Compare the account to the decedent’s will and other estate-planning documents.
- Identify witnesses, including bank personnel, who can speak to the decedent’s intent.
For surviving owners:
- Preserve the account agreement and any evidence of the depositor’s explanation for the joint form.
- Do not assume the presumption ends the inquiry; prepare to respond to convenience, undue influence, or capacity claims.
- Account for any lifetime withdrawals.
Estate Tax Consequences Even When the Survivor Keeps the Account
Who receives the account and how it is taxed are separate questions. Under Internal Revenue Code § 2040, a joint account is generally included in the decedent’s gross estate except for the portion attributable to the surviving owner’s own contributions. When spouses are the only joint owners, one-half is generally included.
Because the New York estate tax builds on the federal gross estate, a joint account that passes to one child by survivorship can still increase the estate tax owed in a larger estate. That raises a further question: who bears the tax attributable to the account. EPTL 2-1.8 governs the apportionment of estate taxes among the persons interested in the estate, and the will’s tax clause can change the default result.
In a family dispute, the tax question can matter almost as much as the ownership question. An executor who must pay tax generated by an account that passed to someone else should evaluate apportionment before the estate’s funds are distributed.
Planning to Avoid the Dispute
A parent who wants help paying bills, without changing who inherits, can use a properly designated convenience account or a power of attorney. A parent who does intend one child to receive an account should say so consistently in the estate plan. Either way, the paperwork should match the intention.
Families who already suspect a problem should act while the records are available. Banks do not keep every document indefinitely, and the people who remember why an account was opened may not be available later. A prompt review of the account documents during administration costs far less than a contested proceeding.
Getting Advice
William G. Goode has represented fiduciaries and beneficiaries in Suffolk County Surrogate’s Court for roughly 25 years. Learn more about the firm’s estate litigation practice, review William G. Goode’s attorney profile, or contact the office.
Five Frequently Asked Questions
Does a joint account always go to the surviving owner?
Not always. Banking Law § 675 creates a presumption of survivorship, but it can be rebutted.
Who has the burden of proof?
The person challenging the surviving owner’s title, under Banking Law § 675(b).
What is a convenience account?
An account under Banking Law § 678 for the depositor’s convenience; the other signer has no survivorship right.
How can the estate recover the account?
A fiduciary may proceed under SCPA 2103 to recover property belonging to the estate that another person holds.
Can an agent under a power of attorney add himself to an account?
That raises questions of the agent’s authority and fiduciary duty, and may be challenged.
Authorities
Banking Law § 675 — Joint deposits and shares; ownership and payment
Banking Law § 678 — Accounts for convenience only
EPTL 2-1.8 — Apportionment of estate taxes
26 U.S.C. § 2040 — Joint interests
SCPA § 2103 — Proceeding by fiduciary to discover property withheld
Matter of Yaros, 90 AD3d 1063 (2d Dept 2011)
Matter of Costantino, 31 AD3d 1097 (4th Dept 2006)
Disclaimer
Attorney Advertising — General Information: This article provides general information, not legal advice, and does not create an attorney-client relationship. Joint account disputes depend on the account documents, the depositor’s intent, and the specific facts. Prior results do not guarantee a similar outcome. The Law Office of William G. Goode, P.C. is responsible for this content.
