As our clients age they often tell us they do not feel comfortable with their ability to continue to manage their financial affairs. They also express the unfounded fear that upon their death all their bank accounts will be frozen for months on end with no ability for anyone to access their funds to satisfy their obligations after death for the care of their home or loved ones. The common step taken by many is to put a family member or trusted friend on their accounts as joint owner so that in the case of a disability or death, funds will be readily accessible to satisfy the client’s obligations without interference.
Unfortunately, this step, although well-intentioned, has sometimes resulted in significant confusion, litigation and costs to the client’s estate because the creation of the joint account and the transfer of those assets to the surviving joint owner at death were not clearly understood by the elderly client or were not properly explained to her by the custodian of the account.
This miscalculation was recently demonstrated in an Appellate Division case, In the Matter of the Estate of Jones, No. A-2557-16T2, 2018 WL 4471686 (N.J. Super. Ct. App. Div. Sept. 19, 2018). Subsequent to the death of her husband, Erna M. Jones visited her investment broker with her middle daughter, Barbara, to open a new account distinct from the one she held jointly with her husband. Mrs. Jones executed a new account application that identified her daughter Barbara as a second party, and the box was checked that the account was “Joint Tenants with Right of Survivorship.” Subsequent to this account opening, Mrs. Jones managed the account, paid her bills and handled her investments with the representative of the brokerage company. At her death in 2015, her daughter Barbara claimed the account as hers as the surviving joint tenant. Barbara’s older brother, David, objected and filed a Complaint under New Jersey’s Multi-Party Deposit Account Act (“MPDAA”) alleging that the account was not held with right of survivorship but was merely a “convenience account,” and that all money in the account was to be distributed equally amongst Mrs. Jones’ surviving three children. Mrs. Jones’ Last Will and Testament provided that her estate was to be divided equally amongst her children and throughout her life, David stated, she had always treated her three children equally. David further alleged that Barbara had utilized undue influence in getting her mother to name her as a joint owner on the account.