Under New Jersey's Multiple Party Deposit Account Act, a “joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit,” unless a contrary intent is shown. N.J.S.A. § 17:16I-4(a). Thus, if only one party has contributed to the account, during the course of that party’s life, he is the sole owner of the account’s funds. In re Estate of Penna, 322 N.J. Super. 417, 425 (App. Div. 1999).
Generally, upon the death of one of the joint account holders, the remaining funds belong to the surviving party or parties unless there is clear. N.J.S.A. § 17:16I-5(a). However, there are some important exceptions to this general rule. See In re Estate of Penna, 322 N.J. Super. at 426. For instance, this presumption may be rebutted by showing “clear and convincing evidence of a different intention at the time the account is created.” N.J.S.A. § 17:16I-5(a). Additionally, the presumption may be overcome by showing that joint account was established as a result of “undue influence.” Estate of Penna, 322 N.J. Super. at 426.
Ordinarily, the person claiming that undue influence was exercised is required to prove their claim. However, when a person demonstrates that there was a confidential relationship, the person who has gained an advantage from that confidence has the burden of proving that undue influence was not used to obtain that advantage and that the depositor who has since passed away understood the consequences of the making the account a joint account. In re Estate of DeFrank, 433 N.J. Super. 258, 268–69 (App. Div. 2013); In re Estate of Penna, 322 N.J. Super. at 425. The benefitting party bears this burden even if when there is no evidence of suspicious circumstances surrounding the creation of the accounts. Id. at 427.
Once, the presumption of undue influence is raised, it only be rebutted by clear and convincing evidence. Bhagat v. Bhagat, 217 N.J. 22, 46 (2014). As the New Jersey Supreme Court explained:
“If the judicial mind is left in doubt and uncertainty as to exactly what the status of the transaction was, the done must be deemed to have failed in the discharge of his burden and the claim of gift must be rejected.”
In re Dodge, 50 N.J. 192, 228 (1967).
Two well known cases that illustrate how a litigant can challenge the presumption that a joint account belongs to the surviving account holder are In re Estate of Penna, 322 N.J. Super. 417 (App. Div. 1999) and In re Estate of DeFrank, 433 N.J. Super. 258 (App. Div. 2013).
In In re Estate of Penna, the decedent was a mother who had opened a joint account with the defendant, one of her daughters. Id. at 419. In 1977, the mother moved from New Jersey to Florida where she remained until 1996. During that time period, she kept her money in New Jersey bank accounts to maintain more favorable interest rates. Id. at 420. Between 1989 and 1996, the mother retitled several CDs so as to change them from payable on death to the defendant to being payable to either the mother or the defendant, thereby turning them into joint accounts. Id. at 421. The mother then returned to New Jersey where she split her time living with the defendant and another daughter. Id. at 420. Within one year of her return to this state, she passed away at the age of ninety. Id. Upon the mother’s death, the second daughter, filed suit challenging the first daughter’s right of survivorship to the joint accounts. Id. at 419. The Appellate Division held that because the defendant occupied a position of trust, she bore the burden of proving (1) that she had not exerted undue influence over her mother and (2) that the mother understood the effects of the joint accounts, namely that defendant would gain the right of survivorship. Id. at 425.
In In re Estate of DeFrank, the plaintiff asserted that that her deceased mother had established joint bank accounts with the plaintiff’s sister prior to passing away for convenience purposes and that her sister had a confidential relationship with their mother and that her mother had intended to provide equally for her daughters upon her death. In re Estate of DeFrank, 433 at 219-70. The plaintiff supported her claim by showing that her mother had used the funds in the joint accounts to pay her own expenses and to make equal gifts to her daughters and grandchildren. Id. at 270. She also showed that her sister had a close relationship with their mother and that their mother had trusted with her financial affairs to this sister, as could be seen by the fact that the sister had been named as the decedent’s attorney-in-fact in two power of attorneys (POAs) and as executor of her Will. Id. at 271. The sister had also assisted their mother with banking and financial transactions. Id.
The sister who was named on the joint accounts filed a motion for summary judgment that the trial judge granted, thereby dismissing the plaintiff’s claims. In doing so, the trial judge focused on the circumstances at the time the joint accounts were established but ignored what transpired after that time. The Appellate Division reversed the trial judge’s decision, after it determined that a rational factfinder could find there was a confidential relationship existed between the mother and sister, or that the accounts were created for the decedent’s convenience only, or both. In reaching its conclusion, the appellate court explained that a factfinder was permitted to look at direct and circumstantial evidence from both before and after the joint accounts were established. Id.
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