Joint Bank Accounts—Who Gets the Funds After the Co-owner Passes Away?

AdobeStock_53083975-300x201By E. Jennifer Reale

When it comes to estate planning, there are a lot of details that need to be handled, and one that can easily be overlooked is ownership of the funds in a joint bank account.

Most people mistakenly assume that if they have a joint bank account with someone, they have absolute rights to every single penny in the account.

But, that is not necessarily true in Connecticut.

Although a Connecticut General Statute creates a presumption that if one of the account holders passes away, the other account holder inherits the funds in the account, that presumption can be overcome.

Who the money belongs to will depend on the circumstances of each case. Among other factors, Connecticut courts consider who contributed to the account, whether the primary contributor expressed any intent to gift the money to the other account holder, and the original purpose of adding the other person to the joint account.

There are many reasons why one person might give another joint access to a bank account, but one common scenario is a parent adding a child to an account so that the child can assist the parent with bill paying and other tasks. In this example, the child does not contribute to the account, but simply has access in order to handle certain financial administrative responsibilities. If, after the parent passes away, his will stipulates that all assets be divided equally between his two children, who should rightfully inherit the money in the joint bank account? Answer: it depends on the individual circumstances of each case.

Both the sibling who had access to the account and the sibling who did not have access may want to speak with an estate planning attorney about the best way to handle the distribution of funds from the parent’s account. Until things are officially handled, however, the sibling who has access to the account should refrain from withdrawing any funds, at least until he or she has spoken with an attorney. If said sibling does pull funds from the account, he or she may not only be required to replace the amount taken, but—if the elements of statutory theft are proven—also be required to pay treble damages. (For example, if the sibling took $100 from the account, he or she may be required to return $300.)

The sibling without access to the account would also benefit from speaking to an attorney since—if anyone did remove money from the account—there may be cause of action for the return of money.

Although there will be many factors courts will consider, the primary focus will be the deceased parent’s intent. For this reason, it’s advisable to clearly define such intentions in a will or other document well ahead of time. Doing so can save a lot of misunderstanding and potentially a great deal of unnecessary maneuvering after one of the account co-owners passes away.

 

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