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Joint Account Assets Could Potentially Go Through Probate Process

Know your rights in the probate process and joint account assets

Joint accounts with a right of survivorship are a typical form of bank account for spouses or other family members. The benefit of a joint account with rights of survivorship is that full ownership of the account is meant to automatically transfer to the survivor or survivors upon one owner’s death, without needing to tangle up the account in the probate process. But it is important to get the legal language right in setting up the account, or the right to survivorship may fail. The Court of Appeals of Texas recently ruled that simply checking a box for “right of survivorship” was not sufficient for ownership to transfer automatically. Continue reading for details about the case and the court’s reasoning, and contact a knowledgeable Houston probate attorney with any additional questions.

Court Rejects Right to Survivorship for Joint Account

The case of Hare v. Longstreet appears simple at first blush: L. D. Hare opened a checking account at Austin Bank. He later added Sherry Longstreet to the account, and fifteen years later added his son, Larry W. Hare. In adding the two parties to the account, L. D. filled out a signature card provided by the bank. Several types of accounts were listed, and L.D. checked the box for “Multiple-Party Account With Right of Survivorship.” Sherry and Larry’s initials were added, and all three signed.

Under Texas law, a right of survivorship has three requirements: (1) A written agreement, that is (2) signed by the decedent, and which includes (3) a “declarative sentence” specifying that ownership of the account “survives” to the other parties upon death. The Court of Appeals found the first two elements satisfied based on the signature card, but found that merely checking the box for “Multiple-Party Account With Right of Survivorship” was not a sufficient “declarative sentence” to create a right of survivorship.

The court found that although the signature card included a warning that the type of account chosen would affect how property passes upon death of the account holder, that notice was incomplete under Texas law to fully explain to signatories the consequences of the account type. The deceased did not sign a statement stating specifically “I acknowledge that ownership of this account passes to the surviving parties upon my death” or something to that effect. No separate document related to the account explained that ownership of the account would automatically pass to the surviving parties upon the death of the account-holder, which could be an appropriate substitute for a formal “declarative sentence.” The Texas code sets out sample language that may be used by parties to clearly identify a right to survivorship, and neither the simple words “right of survivorship” nor a general warning about ownership of the account would suffice.

Joint Account Assets Go Through Probate Process

For these reasons, the court found that the account would instead go to the estate of the deceased L. D. as part of the probate process, and the included funds would pass according to the will or other applicable law.

For assistance with a probate or estate-related issue in Texas, contact a seasoned, professional, and detail-oriented Houston estate planning and probate attorney at the Meineke Law Firm at 713-463-6000.

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