In recent years, a common issue that a growing number of individuals face is how to care for themselves as they age. Healthcare, finances, and even routine errands can pose a significant challenge. Proper planning can ease the burden, but improper planning can create significant risks for both you and your heirs.
One easy trap for individuals to fall into is the creation of a joint checking account, or the addition of another person to an existing checking account, for the purposes of managing finances and purchasing daily essentials. The idea behind the strategy is to enable another individual to pay for your care when you no longer possess the ability. It not only serves as a matter of convenience in that you do not have to consistently reimburse others for expenses, but it also grants another individual the authority to ensure that your finances are in order. Moreover, this strategy involves a fairly simple process of a single trip to the bank and, in certain circumstances, no fee. But, the ease of this strategy comes with a cost. Upon your death, your heirs may not receive the money that you have deposited in that joint checking account.
Under New Jersey law, joint bank accounts are presumed to be created with a right of survivorship. This means that the surviving account holder would be entitled to all of the money deposited in the account, regardless of whether the surviving party deposited any money in the account and regardless of whether you actually intended that result. As a result, the money would never enter into your estate and never be paid to your heirs, even if that is what you actually intended.
Though, if you did not intend for the surviving account holder to acquire the whole interest in your joint account, your heirs may still protect your interest and rebut the presumption of survivorship. Courts have found that heirs have successfully rebutted the presumption of survivorship rights where there is a demonstration that the joint checking account was exclusively intended for the convenience of the true owner of the money in the account. As discussed above, this may come where the surviving party is added for the sole purpose of assisting the true owner in his or her financial affairs. Additionally, courts have found that heirs have successfully rebutted the presumption of survivorship rights where there is a demonstration of a confidential or close relationship between the surviving party and the true owner. If a confidential relationship is established, then the surviving party would be required to demonstrate that he or she did not exert any undue influence over the true owner in acquiring an interest in the joint checking account. While these methods can be used by your heirs to protect you actual intentions and interests, either method will most certainly involve litigation.
In planning your estate you can avoid future litigation and disputes through proper planning and full understanding of the legal implications of certain actions. Though a joint checking account may serve your short term needs, perhaps a power of attorney may be better serve your long term desires. Proper planning avoids unwanted outcomes. It can provide for your care and ensure that your heirs inherit your estate in accordance with your intent.
If you are looking to plan your estate or if you are an heir to an estate which you believe does not represent the intent of a deceased individual, it is strongly recommended that you consult with an attorney. The attorneys at Stark & Stark are very familiar with these issues and would be happy to guide you through the process.