In Ohio, joint bank accounts have a survivorship feature. This means that following the death of one of the owners of a joint account, the ownership of the account automatically passes to the other owners. This is an easy method of estate planning and the reason for the popularity of joint bank accounts. For example, a parent can open a bank account with a child as the joint owner and know the child will own the account at the parent’s death.
Q: Who owns a joint and survivorship account before the death of an owner?
A: Under Ohio law, it is presumed that, during the lifetime of the owners of a joint account, the account belongs to all of them according to the contributions of each, unless there is clear and convincing evidence of a different intent.
Q: Who owns the account after the death of an owner?
A: Ohio law also presumes that after the death of an owner, the assets in a joint bank account are owned by the surviving owners of the account. In 1994, the Supreme Court of Ohio ruled that the way a joint bank account is opened is usually conclusive on the question of ownership after the death of one of the joint owners. The intention of the deceased owner is to be determined by the legal form of the joint account, so usually ownership of a joint account will be automatically transferred to the surviving owner. Only where there is evidence that an owner did not freely intend to establish the joint account (for example, evidence of fraud, duress, undue influence, or lack of mental capacity) will an Ohio court consider an argument that the assets in a joint account should be distributed in a way that is not consistent with joint ownership of the account.
Q: Are there other implications of the 1994 Ohio Supreme Court decision?
A: While the decision makes ownership of these joint accounts more certain, it also requires consumers to be knowledgeable about the legal effects of joint bank accounts. A joint bank account that is set up for convenience, such as, for example, naming one child as a joint owner so an elderly parent’s bills can more easily be paid by the child, will be owned by that child alone upon the parent’s death, even though the parent may have intended the account to be distributed among several children after the parent’s death. In such a case, the parent may be better served by other alternatives, such as the creation of a limited or general durable power of attorney, or the creation of a revocable trust.
Q: What is the law of other states on the ownership of joint bank accounts?
A: The law varies from state to state. In 1989, the National Conference of Commissioners on Uniform State Laws proposed that uniform legislation called the Multiple-Person Accounts Act be adopted in all states. Among other things, the provisions of this Act encourage banks and credit unions to offer pay-on-death accounts and agency accounts as alternatives to joint accounts by protecting the financial institution if it pays in accordance with the terms of the bank account contract. This Act has not been adopted in Ohio, but as of November 2013, it had been enacted in Florida, Alabama, Nebraska, Montana and Arizona. Also, a number of other states have adopted similar provisions as part of their probate codes, so it is now the law in more than half of the states, according to the National Conference of Commissioners.
This “Law You Can Use” consumer legal information column was provided by the Ohio State Bar Association. It was prepared by H. Grant Stephenson, an attorney with the Columbus firm of Porter, Wright, Morris & Arthur.