Texas law has not favored the creation of joint ownership
with right of survivorship (“ROS”) for a variety of historical reasons.
Executors of a deceased’s estate are often left to wonder – is this joint
account non-testamentary (in other words, not an asset of the probate estate
subject to the executor’s control) because it meets the requirements for a
right of survivorship under Texas law?
Financial institutions can be reluctant to pay on these joint accounts
prior to some form of probate, which prevents the co-owner(s) from having
access to funds needed to pay their bills.
So much for careful estate planning to minimize probate
assets!
Chapter XI of the Texas Probate Code deals with
non-testamentary transfers, with particular attention to multi-party accounts
and survivorship rights. One of the first things you should try to obtain is a
copy of the account agreement. Look to see if it uses language such as “on the
death of one party, all sums belong to the surviving party as his or her
separate property and estate.” Tex.
Prob. Code § 439. Reliance on the name of the account, alone, is usually
insufficient to create survivorship rights.
In addition, you may want to check the account agreement
against the proposed “Uniform Single-Party or Multiple-Party Account Form”
described in section 439A of the Texas Probate Code. Banks and other financial
institutions which utilize this form, or something substantially similar to it,
are protected from most claims that could be brought by a deceased’s estate,
personal representative, beneficiaries or heirs if they rely on the
“survivorship” provisions to pay remaining sums to the joint owner(s).
Article by Cynthia W. Veidt, Attorney
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