L.D. opened a bank account in 1998. In 2015, he added his son, Larry, to the account. The only document associated with the account was a signature card. The card had a section labeled “OWNERSHIP OF ACCOUNT – CONSUMER.”
The card directed the account holder to place initials next to the account selected. A notice followed which stated: “THE TYPE ACCOUNT YOU SELECT MAY DETERMINE HOW PROPERTY PASSES ON YOUR DEATH. YOUR WILL MAY NOT CONTROL THE DISPOSITION OF FUNDS HELD IN SOME OF THE FOLLOWING ACCOUNTS.”
The card listed 9 options, each with a box to be marked indicating the choice of account. L.D. had marked the box next to “MULTIPLE-PARTY ACCOUNT WITH SURVIVORSHIP.” L.D. and Larry placed their initials on the blank next to the box and both signed the card.
Larry assumed that when L.D. died, the funds in the account would be his by virtue of a right of survivorship. Larry was wrong. The funds in the account instead became a part of L.D.’s estate and went to Larry’s sister as determined by L.D.’s will. Here’s why.
Texas Estates Code §§113.101-.158 sets out the requirements for the creation of a right of survivorship to a joint account. There must be: (1) a written agreement; (2) signed by the decedent; (3) which specifies that his interest “survives” to the other party.
So what was wrong with the account L.D. and Larry both thought was an account with ROS? The signature card provided a written agreement and it was signed by L.D. The problem was that the language in the signature card did not sufficiently match that of Texas Estates Code §113.052, which the legislature mandates banks include for a valid ROS.
The language in the bank’s form must be the same or substantially similar to that of the language in the statute. It must make clear that following the death of one owner of the account, the account belongs to the survivors.
Here is the portion of the statutory form language salient to creating a right of survivorship:
UNIFORM SINGLE-PARTY OR MULTIPLE PARTY ACCOUNT SELECTION FORM NOTICE: The type of account you select may determine how property passes on your death. Your will may not control the disposition of funds held in some of the following accounts…
Select one of the following accounts by placing your initials next to the account selected:
(4) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP. The parties to the account own the account in proportion to the parties’ net contributions to the account. The financial institution may pay any sum in the account to a party at any time. On the death of a party, the party’s ownership of the account passes to the surviving parties.
The last sentence is crucial. That language was not present in L.D.’s account.
The facts in the hypothetical in this column are essentially those in a Texas case that was decided by the Tyler Court of Appeals in November of last year. Readers should determine first whether or not they want their bank accounts to go to a particular person by ROS or they want the accounts to come into their estates and be passed in accordance with their wills.
Then it is essential to review the documents signed with the bank in setting up any and all accounts to determine whether or not a right of survivorship has been created. Compare the language in the documents with the language set out above in the statute. If an ROS is desired and the language is not exactly the same, then have an attorney review the language to advise whether or not an ROS has been created.
Failing to take the action recommended in the paragraph above could result, upon your death, in money in an account becoming the property of someone you did not intend to have it.
Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives in beautiful Somervell County, near Chalk Mountain.