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Tennessee Case Sheds Light On Bank Accounts And Rights Of Survivorship

Sometimes, a dispute will arise after someone passes away regarding who is entitled to receive monies held by that person in a bank account or other type of account like a 401(k) account, money market account, mutual fund account, CD, or the like. Some beneficiaries or family members may have expected that all, or part, of the money in the account would be distributed to them by virtue of the terms of the Will of the person who died. They may find out, after the death of the person who established the accounts, that another relative or person claims total ownership of the funds in the account by virtue of the right of survivorship status of the account, or because the bank, or other account institution, was directed to pay the funds in the account to a designated beneficiary on the death of the person who established the account or owned it.
In a recent undue influence case, the Tennessee Court of Appeals explained some basic Tennessee law that comes into play when a Will directs one thing as to the distribution of account funds, but someone claims that the funds in the account should go to them, irrespective of the terms of the Will, because the account had a right of survivorship in their favor. The case involves a mother (“Mother”), her son (“Son”) and the Son’s siblings (“Siblings”).

Mother’s Will provided that Son was to receive the real estate owned by Mother, and that the Siblings were to receive the rest of her monetary assets. At the time of Mother’s death, she owned two accounts: (1) a bank account at SunTrust Bank; and (2) a money market account. Son asserted that the funds in both accounts passed outside of Mother’s estate because they were survivorship accounts and not sole owner accounts. The Siblings asserted that the funds in the accounts should not pass outside of the estate.

Son argued that the bank account was a survivorship account because SunTrust Bank classified it as an account with a right of survivorship (“survivorship account”). The court examined the records of SunTrust Bank related to the account and determined that the signature card indicated that it had been set up as a “sole owner” account and not a “joint tenants with right of survivorship account.” Mother had added Son as an authorized signatory on the account after it was established. The SunTrust records also showed that, when Mother had changed the account to remove her deceased husband as an authorized signatory, she had not checked either of the boxes on the form she signed. One box was for “With Survivorship.” The other box was for “Without Survivorship.”

The court held that however SunTrust Bank had designated the account made no difference whatsoever. It then explained that, since there was no indication as to whether the account was survivorship or not on the account signature cards, it was compelled to follow Tennessee Code Annotated section 45-2-703(e)(4). That statute creates a presumption that an account does not have rights of survivorship when there is no clear language in the documents related to the opening of the account or changes to the account showing that the decedent intended to create a right of survivorship. The court determined that the SunTrust account did not have a right of survivorship and, therefore, passed to the estate of Mother.

The money market account of Mother was clearly marked as a survivorship account with Son having the right to the funds in the account upon the death of Mother. Thus, there was no way possible that the court could prevent Son from receiving this money, right? Wrong. The Siblings brought an undue influence case against Son with respect to the money market account, and were successful.

The court found that, at the time Mother signed the signature card making the money market account a survivorship account to the benefit of Son, she and Son had a confidential relationship. In Tennessee, where there is a confidential relationship and a transaction benefitting the person with whom the deceased had the confidential relationship, there is a presumption that the transaction was the product of undue influence. It takes clear and convincing evidence to rebut the presumption of undue influence, and Son did not have such evidence.