If you ever open a bank account with another person, you will probably be subject to a survivorship provision. Having an account arranged in this manner can be a convenient way to pass funds from one party to another and avoid probate. However, what happens when there is conflicting evidence that shows that the decedent intended a different result? A California appellate court recently considered this situation. The court’s ruling on this issue raised the question: Is the right of survivorship safe in California?
What is the Right of Survivorship?
The right of survivorship means that if multiple parties are named on an account or other type of document, and one passes away, the remaining or surviving parties will automatically get the funds or ownership. This provision allows funds and ownership to transfer without the party having to go through probate.
In California, Probate Code section 5302(a) recognizes the right of survivorship and explicitly states that when sums are remaining in a bank account, they belong to the surviving party or parties unless there is “clear and convincing evidence of a different intent.” A party’s intent can be shown in a variety of ways.
Probate Code section 5303 states, however, that “rights of survivorship are determined by the form of the account at the death of the party” and specifies that a joint account holder can only change these terms through specific methods. Section 5303(e) also says that “[a] right of survivorship arising from the express terms of the account or under this section” … “cannot be changed by will.”
Placencia v. Strazicich
Recently, in Placencia v. Strazicich (2019), a California appellate court considered a case where there was a conflict between an account holder’s intent regarding a survivorship provision and what was stated in the account holder’s will. In this case, twenty-four years before his death, Ralph Placencia opened a joint tenancy account with right of survivorship with Lisa, one of his three daughters. Lisa never deposited funds into the account. Shortly before he died, Ralph executed a will. He expressly stated in the document that he wanted to remove Lisa as the account’s only “beneficiary” and that he wanted all three of his daughters to become “beneficiaries” of the account. He also indicated he wanted the account funds placed in a trust to be used to pay off the mortgage on his home.
After Ralph died, Lisa transferred the funds into her name, and her sisters objected. The matter went to court, and evidence was presented, including the will and of conversations that Ralph had with his brother-in-law about removing Lisa. The court found that the evidence showed Ralph intended to remove Lisa and ordered her to account for the funds owed back to the trust. Lisa appealed the decision, and the appellate court held that even though the Probate Code provides that a will cannot be used to change a right of survivorship, a trial court may still examine a decedent’s will as an expression of intent regarding survivorship.
The Placencia decision is an indication that a decedent’s will and other external evidence are fair game when it comes to proving someone’s intent regarding a survivorship provision. Therefore, while survivorship may be safe in California, it may not be an unassailable method of transferring ownership upon death.
At the Law Offices of Alice A. Salvo, we have the California estate planning experience you need to help you plan for the future. Please contact us to schedule a free consultation today so we can help you explore your options and start your solution. https://www.salvolaw.com/