EXECUTOR SUES JOINT BANK ACCOUNT HOLDER FOR TAKING MONEY: a recent estate litigation case of breach of fiduciary duty

In a classic case of joint bank account litigation, or what could be called bank account litigation, a joint tenant who withdrew funds after the death of a bank account owner was sued by the personal representative of the account owner’s estate. A very recent case out of Nebraska, decided literally days ago, sheds light on a very common form of estate litigation which goes on in Florida all the time.

Florida personal representatives, estate beneficiaries, and joint account holders, seem to  always be litigating about Florida back accounts.

How do you know when a Florida bank account is a true “joint account”?  When is a “right of survivorship” not a right of survivorship? When does a Florida bank account which says “JTROS” not go to the named joint account holder, but to the Florida estate?

Is that Florida bank account a joint account, with a right of survivorship which passes the bank account to the joint tenant upon death? Is that Florida bank account an “estate account” which means that upon the death of the Florida owner, the Florida bank account goes to the Florida estate?

In this recent Nebraska case, the person created a bank account. She was the owner, but she also placed the name of another person on the bank account– as a joint owner. In other words, this was a joint bank account. Whatever that means. But what does “joint bank account” really mean? That’s with the estate had a lawsuit about.

After the death of the person who created the joint back account, the surviving joint tenant withdrew all the funds in the bank account. The joint tenant claimed that the bank account funds belonged to him, since he had a right of survivorship to the bank account. The estate of the dead person who created the bank account disagreed. So the personal representative of the estate sued the joint tenant for return of the funds to the estate.

Before it got to the appeals court, the matter was heard by a Nebraska trial court. At the bank account lawsuit trial, there were three important issues addressed by the probate court. First, whether a constructive trust, an equitable action, could be imposed on the bank account. Two, whether the person named on the bank account as a joint owner was an agent, or a fiduciary, of the person who created the bank account. Three, if the joint owner was a fiduciary or agent, was there a breach of fiduciary duty regarding the joint bank account?

In Florida, joint bank accounts are created almost every day in financial institutions, brokerage companies, and banks, up and down the coast. From Stuart, Florida, to Palm Beach Gardens, Florida, to Fort Lauderdale, millions and millions, if not billions of dollars, are held in joint bank accounts in Florida. Florida appeals courts have a number of published opinions involving joint bank account lawsuits. Florida statutes also deal with rights of the joint owners to bank accounts, and the rights of Florida estates to bank accounts which have a joint owner or appear to have a right of survivorship.

Florida also provides estate beneficiaries, and personal representatives of Florida estates with the legal remedy of a “constructive trust”. A constructive trust is not a trust in the true sense of the word, as you and I might think of a trust. A constructive trust is declared by a court when fairness, or equity, should be done, declaring that somebody who has bank funds in his or her possession really doesn’t own those bank funds, but is holding them for the rightful owner. A constructive trust in Florida needs to be distinguished from seeking monetary damages over a bank account in Florida. Generally, in Florida, a constructive trust is not available where money damages are available in the bank account lawsuit.

In the Nebraska case, the estate claimed that the person whose name was on the joint bank account, not the person who created the joint bank account, was an agent, or a fiduciary, of the person who opened the account. The account owner was dead now. So the estate, through the personal representative, who is fighting over the bank account with the named joint survivor.  The estate claimed, among other things, that the joint tenant, who withdrew the bank funds, reached his financial area duty to the account owner, and now, to the estate. The Nebraska court said: “In order to prove that [   ]  is entitled to judgment on the breach of fiduciary duty claim, [ ] needed to adduce evidence (1) that [  ] owed [  ] a fiduciary duty, (2) that [  ]  breached the duty, (3) that his breach was the cause of injury to [  ]’ estate, and (4) that the estate was damaged….”

Florida does recognize joint bank accounts, with the right of survivorship. A Florida resident who opens a Florida bank account with a joint tenant, or a right of survivorship, or a bank account which says “in trust for”, so-called Totten trusts, can be an incomplete gift, that goes to the surviving joint tenant upon the death of the bank account owner. In other words, under Florida law, upon the death of the creator of the joint bank account, the bank account funds, the money in the bank account, automatically, by operation of Florida law, goes to the surviving joint tenant: the named joint account holder of the Florida bank account.

An exception to this joint account rule in Florida, is what’s called a Florida “convenience account.” A convenience account, which not all Florida banks may recognize, is a Florida bank account which looks like a joint account with the right of survivorship. In fact, the Florida bank account may even say “joint tenants” or, “JTROS”. But, the joint bank account may go to the Florida estate upon the death of the person who created the Florida joint account. This is often proven by facts which demonstrate that, one, the person who created the Florida joint account never intended to create a right of survivorship. Stated otherwise, a convenience account can be found by a court of law in Florida when it is demonstrated that the owner or creator of the Florida bank account never intended to pass the bank account at his or her death to the named joint tenant. Two, Florida convenience accounts are often created by a Florida resident when he or she wants another person’s name on the bank account so that that person acts as an agent, or as a fiduciary, to do such limited things as make deposits or pay bills for the real account owner.  A Florida agency, or a Florida fight fiduciary relationship.

Florida estate litigation involving bank accounts often turns on what the dead person intended. Put another way, estate litigation involving joint accounts in Florida often depends upon what you can prove about the person who opened the Florida bank account. What do the Florida bank account records say? What do the account opening documents indicate? What boxes are checked on the bank form which created the joint account? What does the bank officer who opened the joint account say? Did he or she know the account owner and can he or she testify about the bank owner’s intent?