One way to bypass the probate process is to title your assets jointly with another person. For example, you might register your bank account in the name of you and your son. When you die, your son would automatically assume sole ownership of the bank account without having to go through probate. The joint account would not be considered a probate asset passing under your estate.
It’s important to make sure, however, that any asset you intend to hold with another person is properly titled and registered. Informal agreements between family members are not sufficient to prove joint ownership in many cases. A recent decision from the California Court of Appeals, discussed here for informational purposes only, helps illustrate this point.
Mahmood v. Bank of America, N.A.
Aslam Mahmood and his brother Masood Mahmood held a number of accounts with Bank of America. The brothers held some joint accounts while maintaining others in their individual names. In 2006, Aslam Mahmood opened a new certificate of deposit account via telephone.
Banks typically require all account holders to complete a signature card, which identifies the accounts as individual or joint and lists all account owners. Since Aslam Mahmood opened this particular account over the telephone, no signature card was filed. The bank therefore registered the account as solely in the name of Aslam Mahmood.
Aslam Mahmood died in 2009 without leaving a will. Masood Mahmood requested Bank of America pay him the proceeds of the certificate of deposit account opened by his brother three years earlier. Masood Mahmood claimed he was “a party to all financial transactions regarding” his brother and that they always intended their accounts to be either joint or payable upon death to the surviving brother.
Bank of America rejected Mahmood’s claims. He, in turn, sued the bank in Los Angeles County Superior Court. The court ultimately dismissed the lawsuit. Mahmood appealed.
The California Court of Appeals sided with the trial court and Bank of America. It was an open-and-shut case as far as the appeals court was concerned. There was no dispute that the account at issue was registered in the sole name of Aslam Mahmood. Masood Mahmood presented no evidence disputing this fact. Whether or not the brothers intended the account to be joint was irrelevant.
Lessons for Your Own Estate Planning
The obvious lesson from this case is that it’s essential to establish joint ownership of a bank account, or any asset, in writing and preferably at the time the account is opened. You should look at joint registration (or re-registration) as part of your overall estate planning. There are many issues to consider. For instance, while jointly titled assets may not pass as part of your probate estate, they may still be subject to federal estate taxes. That’s why you should always work with an experienced San Diego estate planning attorney in determining the best course of action for your assets. Contact the Law Office of Scott C. Soady today if you have any questions.