Was it a Convenience Account?

October 21, 2011

A convenience account is exactly as it sounds – an account on which the holder adds someone else’s name for purposes of convenience only, i.e., check writing, bill paying, transfers, and withdrawals. It is a frequently litigated topic , as the issue often arises as to whether a joint account had really been intended as such, or whether it was created merely for convenience. If it is the latter, then all of the funds contained in the account will pass to the estate of the initial account holder.

It is generally recognized that Section 675 of the Banking Law creates a presumption that a right of survivorship is intended for each named account holder, but some courts have held that this presumption only arises where the signature card on the account contains the requisite survivorship language (see e.g. Matter of Coon, 148 AD2d 906 [3d Dept 1989]; Matter of Seidel, 134 AD2d 879 [4th Dept 1987]; Matter of Ancell, 5/2/2002 NYLJ 28 [col 4] [Sur Ct, Westchester County]; cf. Sutton v Bank of New York , 250 AD2d 447 [1st Dept 1998]).  Regardless, it is the burden of the person alleging that such an account had been for convenience to come forth with sufficient evidence to rebut any existing presumption, and establish that a convenience account had been intended (see Viggiano v Viggiano, 136 AD2d 640 [2d Dept 1988]). In deciding the issue, courts typically look to the following factors:

  • Whether the decedent was the sole depositor to the account;  
  • Whether the creation of a survivorship interest would deviate from the decedent’s testamentary plan;
  • Whether the account was used exclusively by the decedent during his lifetime;
  • Whether the decedent retained the right to withdraw the proceeds; and
  • The conduct of the surviving joint tenant  (In re Zorskas, 20 Misc 3d 1110[A], [Sur Ct, Nassau County 2008]). 

These considerations will ultimately determine the outcome of Estate of Sanabria, 2011 NY Slip Op 51802(U), a recent case emanating from Bronx County. Surrogate Holzman issued an initial decision in Sanabria last week, granting the temporary administrator’s application for a preliminary injunction against a daughter of the decedent, prohibiting her from withdrawing funds from a bank account that she had held jointly with the decedent during his lifetime. The temporary administrator, who also happened to be a son of the decedent, asserted that the joint account had been for convenience only. The daughter, on the other hand, claimed that the subject account had been held jointly with right of survivorship. Her position was not supported by the signature card, which lacked survivorship language and listed the decedent “or” the daughter as the account holders.  Therefore, even if the account were not a convenience account but merely a co-tenancy, principles of moiety would entitle the daughter to no more than half of the funds contained therein (see Estate of Hamburg, 151 Misc 2d 1034 [Sur Ct, Bronx County 1991]).

On the return date, counsel for the petitioner informed the court that the daughter had withdrawn approximately $358,000 from the joint account, which was then closed. Accordingly, he requested broader relief enjoining the daughter from transferring or disposing of all funds that had been in the joint account, regardless of their current location. The Court granted this relief because the temporary administrator met the requisite elements for preliminary relief, demonstrating (1) a likelihood of success on the merits (by virtue of the signature card); (2) irreparable harm to the estate if the preliminary injunction were not granted; and (3) the balance of equities of his favor (the daughter removed the funds from the account after being on notice of the estate’s claim against her). Notably, the Court’s consideration of the signature card as probative of a likelihood of success on the merits indicates that it is following the line of cases holding survivorship language on the card to be determinative as to whether a presumption of a joint tenancy will arise (see supra).

If, after a hearing, the Court decides that the account was in fact for convenience only, the daughter will be liable for the entire balance of the account as of the date of the decedent’s death.