Introduction
When someone dies in Arizona, one of the first steps is to determine who gets what property. To do that, it is important to categorize each asset based on its titling and whether any beneficiary is listed on the title of the property itself.
Titling is the record owner of the particular account, home, parcel of real estate or other property.
Assets that have titles in Arizona can be classified according to the titling that was effective at the person’s death as follows:
- Trust Assets: Assets titled in the name of a trustee of a trust. Those assets pass to the beneficiaries per the terms of the trust.
- Non-Probate Transfers: Property that has a joint owner with right of survivorship or a beneficiary designation, such as a beneficiary deed to real property. These accounts and other property pass according to the deed or designation. Joint accounts, discussed below, fall into this category. There are various other rules for other types of non-probate transfers.
- Estate or Probate Assets: Assets owned by the Decedent or person who died, not titled in a trust, without leaving any beneficiary designation and without any joint titling. Estate property is often governed by the person’s will. If not, anything that is not otherwise designated would pass according to Arizona’s intestacy laws.
Navigating the complexities of estate administration can be a daunting task, especially when it involves understanding the rights and responsibilities associated with joint bank accounts and other non-probate transfers.
In Arizona, the laws governing joint accounts come with their own set of rules and implications, which can impact the distribution of assets. Whether you’re considering adding a family member to your account or you’re an heir concerned about how joint accounts are handled after a loved one’s passing, understanding Arizona’s specific laws is crucial.
In this article, we’ll delve into the legal intricacies of joint accounts in Arizona. We aim to clarify common misconceptions and provide you with the knowledge you need to make informed decisions. Read on to equip yourself with essential information and, as always, feel free to reach out to us for personalized advice tailored to your unique situation.
Joint Accounts in Arizona
Arizona’s rule is simple. When there are two or more people listed as signers or owners on a bank account, everyone on the account has survivorship rights unless the account says otherwise. See A.R.S. §§ 14-6212(A), (C).
When property is owned under a right of survivorship, the surviving owner automatically receives the dying owner’s share of the property. To avoid this automatic or default rule, the account must specify that it is not with right of survivorship if there is more than one owner/signer on the account.
Real Life Case Example
For example, in In re Elizabeth J. Scozzari Trust, Gerald Scozzari was sued by his siblings to return money he received from a joint bank account with his mother and to remove him as trustee. The trial court ordered Gerald’s removal as trustee and ordered him to return the money. However, the appellate court reversed. The appellate court reinstated Gerald as trustee and held Gerald was entitled to the money from the joint account.
Elizabeth Scozzari executed a will in 1988. The will referenced a trust naming her son, Gerald, as trustee. Elizabeth intended that all of her children share equally in her estate. Thirteen years later, in May 2001, Elizabeth opened a new checking account and added Gerald on the account shortly after. That account was linked to Elizabeth’s savings account at the same bank.
Elizabeth died in 2005. At that time, there was about $75,000 in those accounts. Elizabeth contributed all of the $75,000, but the account did not say if there was a right of survivorship.
Three years later, in July 2008, Gerald’s siblings petitioned for an accounting and removal of Gerald as trustee. As part of the accounting, Gerald claimed that the money in the joint accounts belonged to him. However, Gerald’s siblings claimed the money belonged to the estate.
The court agreed with Gerald: Both Gerald and Elizabeth’s names were on the checks, and Gerald was listed as a recipient on the bank statements. The bank documents listed Gerald as a co-applicant, and there was no evidence Elizabeth signed anything to overcome the default rule that the accounts were with survivorship rights.
Since survivorship rights are automatic under Arizona law, unless the account specifically states otherwise, the court held that Gerald was automatically entitled to the balance of the funds remaining in the joint accounts at the time Elizabeth died. See In re Elizabeth J. Scozzari Trust, 2011 WL 4415843, (Ct. App., 2011)(unreported).
Lessons Learned
The moral of the story is simple. Ensure you know what it means to add someone on your bank or other financial account in Arizona. If the account does not specify otherwise, on the death of a party to the account, the surviving owner(s) is generally entitled to all of the funds. As you can see from the Scozzari case, this rule overrides the person’s last will and testament or trust.
So, if you want an account to be part of your estate and you have a joint signer on the account, make sure you reject the survivorship default rule when you open the account or add a signer.
Want to learn more? Watch our video about Potential Perils of Non-Probate Transfers.
Rights While More than One Account Holder is Still Living
While the owners to a joint account are living, each is entitled to the share of the money they contributed to the account. Unless clear evidence shows otherwise. Married couples are presumed to make equal contributions to bank accounts, in the absence of proof otherwise.
Facing a Joint Account Dispute?
Understanding Arizona’s laws on joint accounts is crucial, especially when disputes arise over asset distribution after a loved one’s passing. These laws can have significant implications, sometimes even overriding wills and trusts.
If you’re entangled in a joint account or other estate or trust dispute in Arizona, don’t navigate these complex waters alone. Contact Berk Law Group today for a focused consultation.
Frequently Asked Questions (FAQ)
1. What is a joint account?
A joint account is a bank or financial account that is owned by two or more individuals, each of whom has equal access to the account’s funds.
2. How does Arizona law treat joint accounts?
In Arizona, joint accounts come with survivorship rights by default, meaning the surviving account holder(s) automatically inherit the deceased account holder’s share unless specified otherwise.
3. Can a will override a joint account’s survivorship rights?
No, Arizona law provides that the survivorship rights in a joint account take priority over provisions in a will.
4. What happens if one joint account holder withdraws all the money?
Each joint account holder is legally entitled to the funds they contributed, unless evidence shows otherwise. Unauthorized withdrawal can lead to legal disputes.
Glossary
Joint Account: A financial account owned by two or more individuals, each with equal access to the account’s funds.
Survivorship Rights: The legal principle where the surviving account holder(s) automatically inherit the deceased account holder’s share of a joint account.
Non-Probate Transfers: Assets that pass directly to a beneficiary without going through probate, such as trust assets, joint accounts with survivorship rights, joint tenancy deeds and beneficiary deeds.
Estate Assets: Assets that are part of the deceased person’s estate and are subject to probate.
Probate: The legal process of administering a deceased person’s estate, including distributing assets and settling debts.
Intestacy Laws: Laws that govern the distribution of estate/probate assets when a person dies without a valid will.
Trust Assets: Assets that are held in a trust and pass to beneficiaries according to the terms of the trust.
Beneficiary Designation: A legal document specifying who will receive an asset upon the owner’s death.