Q: Is it a good idea to put one of my children on my bank accounts to avoid probate when I pass away?
A: If you have more than one child, making only one of them a joint account holder can lead to sibling conflict and litigation.
When naming a child as a joint account holder on your bank account, be sure that it makes sense in the context of your estate plan. Banking Law Section 675 provides that, absent fraud or undue influence, when two or more people open a bank account and deposit cash or securities, a presumption of joint tenancy with rights of survivorship arises. For the presumption to apply, words of survivorship must appear on the signature card or ledger that creates the account.
A signature card denoting “joint tenants” or “joint tenants with right of survivorship” is the best evidence that an account was intended to be paid to the survivor, regardless of whether that person contributed funds to the account. Absent the necessary survivorship language, the statutory presumption under Banking Law Section 675 does not apply. If you intend to leave the account assets to all your children, then naming one child "with rights of survivorship" defeats your intent. Although you may believe that your child will split the money with their siblings, there is no guarantee that will happen.
When rights of survivorship is denoted on the account, the burden of proof in refuting a joint tenancy is placed upon the party challenging the survivor’s claim to the funds on account. Your other child may argue that you added the joint account holder for "convenience" only. However, at this point your children are at odds and likely looking at costly litigation.
If a sibling looks to contest a claim that an account was joint with rights of survivorship, they must show it was established solely “for the convenience” of the depositor. A joint account established to assist with bill paying, check writing and managing financial affairs is usually for convenience purposes. It is not meant as means of transferring the funds to the other person titled on account.
If a joint tenancy is contested and the signature card is lost or otherwise does not denote survivorship, the burden shifts to the proponent of survivorship to prove their claim. Courts will look to other indicia of the parties’ intent. Such testimony might be from bank officers involved in account opening, the types of accounts the financial institution offered at the time, and the information displayed on the account statements or cancelled checks.
Although naming a child on your account may seem like a simple solution to avoiding probate, the unintended consequences can be dire. Not only may it result in disinheriting some of your children, but it exposes those assets to your child’s creditors. Consulting with an experienced estate planning attorney is more than worth the time and money to avoid contentious estate litigation.
Paul M. O'Brien, Esq. is Counsel at Burner Prudenti Law, P.C. focusing his practice areas on Estate Litigation. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.