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In re Estate of Dickerson

A-0516-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

BANKS; JOINT ACCOUNTS—A person challenging a survivor’s right to the proceeds of a joint account has the burden of proving that there was a confidential relationship between the account holders before the survivor has to show the intent of the decedent in establishing the account.

In 1992, several years before her father’s death, one of his daughters visited him from out of state. During this visit, the daughter took him to his attorney’s office where he executed an Advance Medical Directive giving her his proxy and a Power of Attorney naming her as agent. She also took him to five different banks where he made her a joint tenant on each of his accounts. The accounts were then consolidated into one account. At that time, the father traveled independently across the nation, owned a business, and managed his own financial affairs. In 1994, the father moved in with this daughter at her home in Texas. At this time, he still functioned independently and managed his own financial affairs. He opened a new savings account with the daughter as a joint tenant. He deposited checks in the account. As the balance increased, the father withdrew money and purchased annuities with his daughter and her sister as co-beneficiaries. By 1996, the father’s memory was failing and he began showing signs of dementia. His daughter then took over his finances. In 1998, believing her father was competent, his daughter in New Jersey accepted a power of attorney from him authorizing her to sell property in New Jersey.

In 1999, the New Jersey daughter exercised the power of attorney to execute a stock redemption agreement on her father’s behalf, essentially selling his fifty-percent interest in the family business to his son. Pursuant to that agreement, each month, the son paid over three thousand dollars to his father. The money was deposited in the Texas account. With his Texas daughter’s assistance, the father withdrew those funds and continued to purchase the annuities benefitting both of his daughters equally. The father passed away in 2001. The Texas daughter then transferred the funds from the New Jersey account into the Texas account. However, before she closed the New Jersey account, her sister went to the bank to withdraw money. When she was not allowed to do so by the bank, she called her sister in Texas and demanded that the money be placed in an estate account. The Texas daughter then ultimately converted the Texas account to an estate account. She maintained, however, that the money in the New Jersey account and in the Texas joint accounts belonged to her by reason of her right of survivorship. The New Jersey sister then sued.

The lower court concluded that the Multiple-Party Deposit Account Act (Act) governed the ownership and survivorship of the joint accounts, and concluded that the New Jersey sister failed to demonstrate by clear and convincing evidence that her father did not intend to create joint ownership with a right of survivorship when he made his Texas daughter the joint owner of the accounts.

On appeal, the New Jersey daughter argued that the lower court erred by placing the burden on her. She maintained that because of the confidential relationship between her sister and her father, it should have been her sister’s burden to demonstrate that her father intended to make a gift, and that he acted without undue influence. The New Jersey daughter contended that a confidential relationship existed by virtue of the 1992 powers of attorney and the fact that her sister controlled the father’s financial affairs after he developed dementia in 1996.

The Appellate Division stated that the sole question was which standard applies: the statutory standard for the survivor of a joint account or the burden-shifting standard of a confidential relationship. A presumption of undue influence arises with respect to an inter vivos gift to a donee with whom the donor has a confidential relationship. Where the dependency of the donor upon the donee is demonstrated, a presumption arises that the donor does not understand the consequences of his act. Thus, the New Jersey daughter had to demonstrate that a confidential relationship existed between her father and her sister at the time the joint accounts were created.

The Court concluded that there was no confidential relationship between the father and the Texas daughter when the joint accounts were created. In 1992, when the accounts were created, the father was living in New Jersey while the daughter was living in Texas; he was participating in the family business, managing his own affairs, had his own legal counsel, and traveled independently to visit the daughter in Texas. He was not dependent on the daughter for his daily needs or financial advice, and he had the advice of counsel when he granted the powers of attorney to his daughter at the same time he created the joint accounts. In 1994, when the father created the joint account in Texas, he was still managing his own financial affairs and there was no evidence that the daughter advised or persuaded him to create the joint account. The Court pointed out that when the father’s memory began to fail, the daughter continued to purchase the annuities for the joint benefit of herself and the sister from the funds in the Texas account. Her sister received her share of those annuities. Finally, her sister did not question the father’s competence when she accepted a power of attorney to sell his property in New Jersey in 1998.

Therefore, since the sister in New Jersey failed to prove a confidential relationship between her father and her sister in Texas when the joint accounts were created, the statutory standard for determination of ownership of the accounts applied. For that reason, the Appellate Division affirmed the lower court’s decision, that the New Jersey sister failed to meet the burden of demonstrating by clear and convincing evidence that the father did not intend to create joint ownership with a right of survivorship when he made his Texas daughter the joint owner of the accounts.

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