Right of Survivorship Accounts and Fiduciaries May Clash

When planning for the management of finances alongside estate planning, many decide to set up bank accounts with another person to assist in the management of the money. There are multiple mechanisms to allow someone to help manage one's finances, and there are important distinctions and differences that can affect where the money goes upon the death of the account holder.

The Court of Appeals of Texas recently decided Kirkpatrick v. Cusick, which may make some joint account holders re-think the way their accounts are set up. The case involved a deceased woman, her son, her son-in-law, and her two daughters. The elderly woman used her son to assist her with the management of her finances. As her health declined, she began to worry about his ability to manage her money, and often questioned his financial decision-making. With the help of her two daughters, she removed her son from positions of authority regarding her financial accounts, and executed a new will, disinheriting him and removing him as executor of her estate. The money formerly under his control was given back to her.

Soon after, the elderly woman requested that her son-in-law, an attorney, take over the role her son once had, managing her bank accounts and finances. He was also appointed as executor of her estate. Accounts were opened up with her assets, totaling approximately $282,000. Her will was updated to indicate that her two daughters would benefit equally from the funds left in her estate upon her death. Additionally, she appointed her son-in-law as her attorney-in-fact, with a power of attorney.

About a month later, the woman passed away. Upon her death, the son-in-law became the sole owner of the funds in the deceased woman's bank account. After writing each of the daughters, including his wife, a check for $12,500, which he considered a "good will gesture," he transferred the remaining amount to his own bank accounts. The daughters brought an action to recover the funds in the account.

Joint bank accounts with right of survivorship

One mechanism for providing for the transfer of assets upon one's death is a bank account that is designated as a joint account, with the right of survivorship to the joint owner. When this type of account is set up, upon the death of one owner, the other account owner becomes full owner of the funds in the account. In the Kirkpatrick case, a bank representative testified that the elderly woman was aware of the way the account worked, and set it up voluntarily and knowingly.

The son-in-law, as the survivor of the account, believed that he rightfully owned the funds upon her death. However, the deceased woman's daughters argued to the Court of Appeals, that he breached a duty as the woman's fiduciary, because he was aware of her instructions to split the proceeds between her daughters, and kept the money regardless. The court held that the man was not entitled to an automatic judgment in his favor regarding the proceeds of the account, and sent the case back to the lower court for a trial to determine whether he, in fact, breached his duty as the woman's fiduciary.

Planning for the management of your finances and assets upon your death can be complicated. The assistance of a skilled estate lawyer can help ensure that your assets end up in the hands of the ones you intend to benefit. If you believe someone has breached a duty, or wrongfully benefited from their receipt of estate funds, contact an attorney today.