Joint Bank Accounts: They Don’t Always Bypass Probate

It is commonly assumed that if a person dies with a joint bank account,  the surviving account holder automatically takes over sole possession of the account, and the account bypasses the probate of the decedent account holder’s estate.

That assumption can in several instances be wrong.

Under Massachusetts law, the question of whether a bank account ultimately belongs to the co-owner of the account following decedent’s death,  or whether it should be part of the decedent’s estate,  is a question of fact.    The considerations that courts examine in answering the question are the following:

1.  The decedent’s intention in opening the account.   That is,  did the decedent place the co-owner on the account for the convenience of the decedent,  or did he/she do so to allow the co-owner to use the account in the same manner as the decedent.

2.  Whether the surviving co-owner ever had interest from the account reported in his/her name for tax purposes.   If interest was regularly reported by the bank in the decedent’s name,  this counsels in favor of a finding that the account is truly an asset of the estate.

3.  Whether the surviving co-owner regularly made withdrawals from the account.    If he/she did not make such withdrawals,  this likewise counsels in favor of the account as being part of the decedent’s estate.

4.  Who kept possession of passbooks for the account.     If the decedent kept possession of the passbooks (and passbooks, until recently, were commonly used for certificate of deposit accounts),  then this would support an argument that the account should be part of the estate.

Disputes over these bank accounts usually arise when the executor or administrator of a decedent’s estate also happens to be the surviving joint account holder.      In such instance the appropriate remedy is for the heirs of the estate (who presumably would have divided up the proceeds of the account were it to have gone through the probate process) to sue the executor or administrator in what is known as an “equity” proceeding.

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