United States: Bank Accounts And "A Matter Of Convenience"

All too often, though, a family member or other third party objects to the survivor's ownership rights. Fortunately, New York has rules to help resolve this problem.

A state statute presumes that an account opened in the name of a depositor and another person that is payable to either, or the survivor, generally is a joint account if the account's signature card contains "survivorship" language. Importantly, the use of survivorship language only in the title of the account is insufficient to create a right of survivorship.

A person may challenge a "joint account" characterization by arguing that the account had been opened in that form as a "matter of convenience" only. A recent decision by an appellate court in New York demonstrates, however, how difficult it is to succeed on such a challenge.

The case arose in September 1988 when Catherine Stalter opened a passbook savings account at her local bank in her name and in the name of her close friend, Shirley Calabro. Ms. Stalter alone contributed money to the account and apparently retained the bankbook until shortly before her death in March 1995 when, while Ms. Stalter was hospitalized, Ms. Calabro made a few deposits to the account for her.

After Ms. Calabro refused to relinquish Ms. Stalter's bankbook, the executor of Ms. Stalter's estate filed an action against Ms. Calabro seeking to establish the ownership of the account. The Surrogate's Court concluded that the savings account was a joint account with a right of survivorship, thereby entitling Ms. Calabro to the entire balance. Ms. Stalter's executor appealed.

The appellate court first noted that the signature card for the savings account contained the requisite survivorship language. It then found that there was insufficient evidence to demonstrate that Ms. Stalter had opened the account as a matter of convenience.

The appellate court acknowledged that a handwritten letter by Ms. Stalter recited that the money in the account was not to be given to Ms. Calabro on Ms. Stalter's death but that the funds were to become part of Ms. Stalter's estate or be used to pay Ms. Calabro "for her work and trouble." However, the appellate court said, this letter did not show Ms. Stalter's intent at the time she opened the account because the letter was not dated and could have been written at any point after the account had been opened. The appellate court concluded that it was "most unfortunate" that Ms. Calabro had elected to assert an ownership interest in the account to the detriment of Ms. Stalter's residuary charitable beneficiaries, but found that it had no choice other than to conclude that she was entitled to the proceeds in the account.

Certainly there are instances where a person is able to demonstrate "convenience." In one case, for example, an account was opened by an elderly woman who could not read or write in her native Italian or in English. The woman named one of her daughters on the account but kept the passbook herself. After the woman died, the daughter testified that she would not have withdrawn any money from the account without her mother's permission. Emphasizing that the deceased woman had left her estate to her four children, "share and share alike," and that the bank account was the major portion of her estate, the court ruled that the woman had opened the account as a matter of convenience and had not intended to give only one daughter ownership of the funds on her death.