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Joint Bank Account With Right Of Survivorship Case: Tennessee Court Of Appeals Lays Ground Rules

In our practice, we are pretty frequently involved in cases (usually undue influence cases) where parties, usually relatives, are at odds over who should receive funds owned by a deceased relative in a bank account, or certificate of deposit. A recent case from the Tennessee Court of Appeals, Guess v. Finlay, not only provides a very useful analysis of Tennessee law regarding joint accounts with rights of survivorship, but also, reverses some prior Tennessee law regarding joint accounts.

Here are the facts:
• At the time of his death, Deceased had accounts at SunTrust Bank worth nearly $250,000.00, consisting of a checking account, a money market account, and CDs
• All of the accounts had been funded solely by Deceased, but were joint accounts of Deceased and Relative
• After Deceased passed away, Executor filed suit against Relative to recover all of the funds in all of the SunTrust accounts for the Estate
Of importance to the court’s decision in this case were the details of how the SunTrust accounts were set up. On some of the SunTrust accounts, Relative’s name had been on the accounts since they were opened: On others, Relative’s name was added after Deceased opened the accounts. Most of the $250,000.00 was in the certificates of deposit.

For the checking account and the money market account, the bank had both the Deceased and Relative sign a “personal account signature card” (which is, in reality, an 8 inch by 11 inch piece of paper). On both cards, the Deceased and Relative agreed that the accounts were governed by the bank’s standard rules and regulations, which had been provided to them. SunTrust Bank’s rules and regulations stated that it would treat all joint accounts as joint accounts with rights of survivorship, unless indicated otherwise. When Deceased purchased the CDs in the name of Deceased and Relative, Deceased also signed a document stating that he would be bound by the bank’s rules and regulations.

On the cards signed for the money market and checking accounts, there was language, at the bottom of each card, requiring residents of certain states, which did not include Tennessee, to check a box indicating that the account was either “with survivorship,” or “without survivorship.” The bank did not require Deceased or Relative to check either box on either card.

The trial court, the Chancery Court for Hamilton County, Tennessee, held that Relative was not entitled to the money market account and checking account funds, but was entitled to the funds from the certificates of deposit. Why? The trial court determined that SunTrust Bank had not complied with a Tennessee statute, T.C.A. §45-2-703, because it did not give Deceased the chance to designate whether he wanted the accounts to be with or without survivorship. In the trial court’s opinion, if SunTrust could require account holders in other states to check a box indicating whether the account was with or without survivorship, it could require account holders in Tennessee to do the same thing. The trial court held that, because T.C.A. §45-2-703 did not apply to certificates of deposit, the money from the CDs belonged to Relative.

Both parties appealed to the Tennessee Court of Appeals. It reversed the trial court, and held that the funds in the money market account and checking account belonged to Relative. The court of appeals also held that T.C.A. §45-2-703 does apply to certificates of deposit, reversing a 1991 decision it had reached in another case.

The court of appeals determined that SunTrust Bank had complied with T.C.A. §45-2-703 by providing, in its rules and regulations as set forth above, that it would maintain all joint accounts as joint accounts with rights of survivorship, unless otherwise indicated. Although the Deceased had never checked either of the boxes on the signature cards, he had never indicated that he wanted the accounts maintained as joint accounts without survivorship. Thus, held the Court of Appeals, the accounts were properly established as joint accounts with rights of survivorship.

Under T.C.A. §45-2-703, a designation of an account as joint tenants with right of survivorship is, as stated by the court of appeals, conclusive evidence that the intent of the parties named on the account was that ownership of the account funds vest in the survivor.