NJ Appellate Court Weighs In on Joint Accounts and Inter Vivos Transfers
In the Matter of the Estate of Jones, No. A-2557-16T2, 2018 WL 4471686 (N.J. Super. Ct. App. Div. Sept. 19, 2018).
The Appellate Division addressed the difference between joint accounts and convenience accounts, and the standard for undue influence claims in the context of joint accounts.
Erna M. Jones (“decedent”) was married to Walter R. Jones, Sr. They had three children: David, Barbara, and Walter. Mr. Jones died in 1998 and at the time of his death, he and decedent had, among other things, an investment brokerage account with Olde Discount Corporation (“ODS”), which consisted of money market funds, stocks, corporate bonds, mutual funds, and a unit investment trust. Id. at *3.
ODS had certain regulations regarding its investment accounts, including a regulation which required that when a joint owner of an account dies, the account must be closed and the proceeds transferred to the owner’s estate or to a new account in the name of the surviving party. Id. at *3. After Mr. Jones died, decedent arranged to meet with the investment representative at ODS to comply with the regulation. The decedent’s daughter, Barbara, accompanied her mother to the meeting. At the meeting, the decedent and Barbara completed an account application, which identified decedent as the “applicant” and Barbara as a “second party.” Id. at *3-4. They also checked the box for an account with “joint tenants with rights of survivorship.” Id. at *4. The account was approved in 1998.
Decedent died in 2015 and shortly thereafter, her son, David filed a complaint seeking a determination under the New Jersey Multi-Party Deposit Account Act (“MPDAA”) that the decedent’s account was not held with Barbara as joint tenants with a right of survivorship. Id. at *6-7. David contended that the account was merely a convenience account and that all monies therein were part of the decedent’s estate and should be distributed to her children equally, pursuant to the terms of her will. Id. Moreover, David alleged that Barbara unduly influenced the decedent into naming her as a joint owner on the account. Id.
After a trial, the trial court found that Barbara did not exercise undue influence upon the decedent when she opened the account. Id. at *8. The court further found the decedent did not intend to establish a convenience account; rather, Barbara was a joint owner of the account with a right of survivorship, and she was entitled to all of the funds in the account upon the decedent’s death. Id.
David appealed and alleged that Barbara was required to establish by clear and convincing evidence not only that the decedent created an account free of undue influence, but also that the decedent intended to make an inter vivos gift. Id. at *9.
The Appellate Division affirmed. First, the appeals court found the account was a joint account — not a convenience account. The court relied on the MPDAA, codified as N.J.S.A. §17:16I-5(a), which provides in pertinent part that “[s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created.” Id. at *11. By contrast, when a depositor creates a joint account as a convenience, the monies in the account do not pass to the other named party upon the depositor’s death. Id.
The court noted that the parties agreed that the account was a “joint account” as defined in the statute. Id. Additionally, the trial court found that Barbara testified credibly about the circumstances under which the account was opened and her testimony was corroborated by the investment representative’s testimony and the documentary evidence presented at trial. Id. at *12. Furthermore, the trial court noted there was no evidence to corroborate David’s assertion that the decedent once told him that she added Barbara as an owner of the account “for convenience”. Id.
Second, the appeals court found that the trial judge applied the correct standard to the claim of undue influence: once a confidential relationship is established, a presumption of undue influence arises, which the survivor must rebut by clear and convincing evidence. Id. at *13 (quoting Pascale v. Pascale, 113 N.J. 20, 30-32 (App. Div. 1988)). The trial court found a confidential relationship existed between the decedent and Barbara, but Barbara did not exercise undue influence over the decedent at the time the account was opened. Id. at *17. For instance: the decedent made her own financial decisions; in 1998 the decedent was active and independent; and decedent wrote her own checks and handled the household expenses. Id. at *17-18. Accordingly, the court found that Barbara had presented clear and convincing evidence to rebut the presumption that she exercised undue influence over the decedent with regard to the account. Id. at *18-19.
Finally, on appeal David argued that Barbara was required to show that the decedent intended to make an inter vivos transfer of the account. The trial court found that the decedent did not intend to make an inter vivos transfer because the record clearly established that she retained her full interest in the account during her lifetime. Id. at *15-16. The Appellate Division opined that the trial court’s finding that the decedent did not intend to make an inter vivos transfer did not preclude the lower court from deciding that the decedent intended for Barbara to be a joint owner of the account, with a right of survivorship. Id. at *16.