Joint Bank Accounts upon Death

17:16I-1. Short title This act shall be known and may be cited as the "Multiple-party Deposit Account Act" . L.1979, c. 491, s. 1. 17:16I-2. Definitions As used in this act unless the context otherwise requires: a. "Account" means a contract of deposit of funds between a depositor and a financial institution, and includes a checking account, savings account, certificate of deposit, share account and other like arrangement; b. "Beneficiary" means a person named in a trust account as one for whom a party to the account is named as trustee; c. "Financial institution" means any organization authorized to do business under State or Federal laws relating to financial institutions, including, without limitation, banks and trust companies, savings banks, building and loan associations, savings and loan associations; d. "Joint account" means an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship, and regardless whether the names of the parties are stated in the conjunctive or in the disjunctive; e. A "multiple-party account" is any of the following types of account: (1) a joint account, (2) a P.O.D. account, or (3) a trust account. It does not include accounts established for deposit of funds of a partnership, joint venture, or other association for business purposes, or accounts controlled by one or more persons as the duly authorized agent or trustee for a corporation, unincorporated association, charitable or civic organization or a regular fiduciary or trust account where the relationship is established other than by deposit agreement; f. "Net contribution" of a party to a joint account as of any given time is the sum of all deposits thereto made by or for him, less all withdrawals made by or for him which have not been paid to or applied to the use of any other party, plus a pro rata share of any interest or dividends included in the current balance. The term includes, in addition, any proceeds of deposit life insurance added to the account by reason of the death of the party whose net contribution is in question; g. "Party" means a person who, by the terms of the account, has a present right, subject to request, to payment from a multiple-party account. A P.O.D. payee or beneficiary of a trust account is a party only after the account becomes payable to him by reason of his surviving the original payee or trustee. Unless the context otherwise requires, it includes a guardian, conservator, personal representative, or assignee, including an attaching creditor, of a party. It also includes a person identified as a trustee of an account for another whether or not a beneficiary is named, but it does not include any named beneficiary unless he has a present right of withdrawal; h. "Payment" of sums on deposit includes withdrawal, payment on check or other directive of a party, and any pledge of sums on deposit by a party of any setoff, or reduction or other disposition of all or part of an account pursuant to a pledge; i. "Proof of death" includes a certified or authenticated copy of a death certificate purporting to be issued by an official or agency of the place where the death purportedly occurred, and a certified or authenticated copy of any judgment or record or report of a court or a governmental agency, domestic or foreign, that a person is dead; j. "P.O.D. account" means an account payable on request to one person during lifetime and on his death to one or more P.O.D. payees, or to one or more persons during their lifetimes and on the death of all of them to one or more P.O.D. payees; k. "P.O.D. payee" means a person designated on a P.O.D. account as one to whom the account is payable on request after the death of one or more persons; l . "Request" means a proper request for withdrawal, or a check or order for payment, which complies with all conditions of the account, including special requirements concerning necessary signatures and regulations of the financial institution; but if the financial institution conditions withdrawal or payment on advance notice, for purposes of this part the request for withdrawal or payment is treated as immediately effective and a notice of intent to withdraw is treated as a request for withdrawal; m. "Sums on deposit" means the balance payable on a multiple-party account including interest, dividends, and in addition any deposit life insurance proceeds added to the account by reason of the death of a party; n. "Trust account" means an account in the name of one or more parties as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with the financial institution and there is no subject of the trust other than the sums on deposit in the account; it is not essential that payment to the beneficiary be mentioned in the deposit agreement. A trust account does not include a regular trust account under a testamentary trust or a trust agreement which has significance apart from the account, or a fiduciary account arising from a fiduciary relation such as attorney-client; o . "Withdrawal" includes payment to a third person pursuant to check or other directive of a party; and p. "Written notice or order" received by a financial institution is effective for a particular transaction from the time it is brought to the attention of the individual conducting that transaction. L.1979, c. 491, s. 2. 17:16I-3. Ownership as between parties and others; protection of financial institutions The provisions of sections 4 to 6 concerning beneficial ownership as between parties, or as between parties and P.O.D. payees or beneficiaries of multiple-party accounts, are relevant only to controversies between these persons and their creditors and other successors, and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts. The provisions of sections 8 to 13 govern the liability of financial institutions who make payments pursuant thereto, and their setoff rights. L.1979, c. 491, s. 3. 17:16I-3. Ownership as between parties and others; protection of financial institutions The provisions of sections 4 to 6 concerning beneficial ownership as between parties, or as between parties and P.O.D. payees or beneficiaries of multiple-party accounts, are relevant only to controversies between these persons and their creditors and other successors, and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts. The provisions of sections 8 to 13 govern the liability of financial institutions who make payments pursuant thereto, and their setoff rights. L.1979, c. 491, s. 3. 17:16I-4. Ownership during lifetime Unless a contrary intent is manifested by the terms of the contract, or the deposit agreement, or there is other clear and convincing evidence of a different intent at the time the account is created: a. A joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit. In the absence of proof of net contributions, the account belongs in equal shares to all parties having present right of withdrawal. This subsection shall not be construed to affect the right of the court to effectuate an equitable distribution of property between the parties in an action for divorce pursuant to N.J.S. 2A:34-23. b. A P.O.D. account belongs to the original payee during his lifetime and not to the P.O.D. payee or payees; if two or more parties are named as original payees, during their lifetimes rights as between them are governed by subsection a. of this section. c. A trust account belongs beneficially to the trustee during his lifetime, and if two or more parties are named as trustee on the account, during their lifetimes beneficial rights as between them are governed by subsection a. of this section. If there is an irrevocable trust, the account belongs beneficially to the beneficiary. L.1979, c. 491, s. 4. 17:16I-5. Right of survivorship a. Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created. If there are two or more surviving parties, their respective ownerships during lifetime shall be in proportion to their previous ownership interests under section 4 augmented by an equal share for each survivor of any interest the decedent may have owned in the account immediately before his death; and the right of survivorship continues between the surviving parties. b. If the account is a P.O.D. account; (1) On death of one of two or more original payees the rights to any sums remaining on deposit are governed by subsection "a" ; (2) On death of the sole original payee or of the survivor of two or more original payees, any sums remaining on deposit belong to the P.O.D. payee or payees if surviving, or to the survivor of them if one or more die before the original payee; if two or more P.O.D. payees survive, there is no right of survivorship in the event of death of a P.O.D. payee thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them. c. If the account is a trust account; (1) On death of one of two or more trustees, the rights to any sums remaining on deposit are governed by subsection "a" ; (2) On death of the sole trustee or the survivor of two or more trustees, any sums remaining on deposit belong to the person or persons named as beneficiaries, if surviving, or to the survivor of them if one or more die before the trustee, unless there is clear evidence of a contrary intent; if two or more beneficiaries survive, there is no right of survivorship in event of death of any beneficiary thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them. d. In other cases, the death of any party to a multiple-party account has no effect on beneficial ownership of the account other than to transfer the rights of the decedent as part of his estate. e. A right of survivorship arising from the express terms of the account or under this section, a beneficiary designation in a trust account, or a P.O.D. payee designation, cannot be changed by will. L.1979, c. 491, s. 5. 17:16I-6. Determination of rights at death of party; alteration of form of account; notice or order to financial institution The provisions of section 5 as to rights of survivorship are determined by the form of the account at the death of a party. This form may be altered by written notice or order given by a party to the financial institution to change the form of the account or to stop or vary payment under the terms of the account. The order or request must be signed by a party, received by the financial institution during the party's lifetime, and not countermanded by other written order of the same party during his lifetime. L.1979, c. 491, s. 6. 17:16I-7. Rights of creditors No multiple-party account will be effective against an estate of a deceased party to transfer to a survivor sums needed to pay debts, taxes, and expenses of administration, if other assets of the estate are insufficient. A surviving party, P.O.D. payee, or beneficiary who receives payment from a multiple-party account after the death of a deceased party shall be liable to account to his personal representative for amounts the decedent owned beneficially immediately before his death to the extent necessary to discharge the claims and charges mentioned above remaining unpaid after application of the decedent's estate. No proceeding to assert this liability shall be commenced unless the personal representative has received a written demand by a creditor, and no proceeding shall be commenced later than 2 years following the death of the decedent. Sums recovered by the personal representative shall be administered as part of the decedent's estate. This section shall not affect the right of a financial institution to make payment on multiple-party accounts according to the terms thereof, or make it liable to the estate of a deceased party unless before payment the institution has been served with an order of court restraining the payment. L.1979, c. 491, s. 7. 17:16I-8.Multiple-party accounts; payments; notice 8. Financial institutions may enter into multiple-party accounts to the same extent that they may enter into single-party accounts. The following payments from a multiple-party account by the financial institution, including payment of the entire account balance, are deemed authorized by all parties to, and any other person with an interest in, the multiple-party account, without any duty on the part of the financial institution to consider the net contributions of the parties to the account: a. Payments, on request, to any one or more of the parties; b. Payments pursuant to any statutory or common law right of set off, levy, attachment or other valid legal process or court order, relating to the interest of any one or more of the parties; and c. Payments, on request, to a trustee in bankruptcy, receiver in any state or federal insolvency proceeding, or other duly authorized insolvency representative of any one or more of the parties. A financial institution shall not be required to inquire as to the source of funds received for deposit to a multiple-party account, or to inquire as to the proposed application of any sum withdrawn from an account, for purposes of establishing net contributions. Notice that the entire account balance is subject to subsections b. and c. of this section shall be given to the parties by the financial institution, either in the account agreement or by separate document, in the manner the Commissioner of Banking may direct by regulation. Any account for which notice is not given shall not be subject to the terms of subsection b. or c. of this section. L.1979,c.491,s.8; amended 1995,c.372. 17:16I-9. Financial institution protection; payment after death or disability; joint account Any sums in a joint account may be paid, on request, to any party without regard to whether any other party is incapacitated or deceased at the time the payment is demanded; but payment may not be made to the personal representative or heirs of a deceased party unless proofs of death are presented to the financial institution showing that the decedent was the last surviving party or unless there is no right of survivorship under section 5. L.1979, c. 491, s. 9. 17:16I-10. Payment of P.O.D. account Any P.O.D. account may be paid, on request, to any original party to the account. Payment may be made, on request, to the P.O.D. payee or to the personal representative or heirs of a deceased P.O.D. payee upon presentation to the financial institution of proof of death showing that the P.O.D. payee survived all persons named as original payees. Payment may be made to the personal representative or heirs of a deceased original payee if proof of death is presented to the financial institution showing that his decedent was the survivor of all other persons named on the account either as an original payee or as P.O.D. payee. L.1979, c. 491, s. 10. 17:16I-11. Payment of trust account Any trust account may be paid, on request, to any trustee. Unless the financial institution has received written notice that the beneficiary has a vested interest not dependent upon his surviving the trustee, payment may be made to the personal representative or heirs of a deceased trustee if proof of death is presented to the financial institution showing that his decedent was the survivor of all other persons named on the account either as trustee or beneficiary. Payment may be made, on request, to the beneficiary upon presentation to the financial institution of proof of death showing that the beneficiary or beneficiaries survived all persons named as trustees. L.1979, c. 491, s. 11. 17:16I-12. Beneficial ownership of funds in multiple-party accounts a. Payment made pursuant to subsection b. of this section, or pursuant to section 8, 9, 10 or 11 of this act or section 89, 90 or 91 of P.L. 1963, c. 144 (C. 17:12B-89 through C. 17:12B-91) discharges the financial institution from all claims for amounts so paid, whether or not the payment is consistent with the beneficial ownership of the account as between parties, P.O.D. payees, or beneficiaries, or their successors. The protection here given does not extend to payments made after a financial institution has received written notice from any party able to request present payment to the effect that withdrawals in accordance with the terms of the account should not be permitted. Unless the notice is withdrawn by the person giving it, the successor of any deceased party must concur in any demand for withdrawal, if the financial institution is to be protected under this section. No other notice or any other information shown to have been available to a financial institution shall affect its right to the protection provided here. The protection here provided shall have no bearing on the rights of parties in disputes between themselves or their successors concerning the beneficial ownership of funds in, or withdrawn from, multiple-party accounts. Financial institutions refusing or altering payment pursuant to written notice or order from any party able to request present payment shall not be liable to any other party to the account, or beneficiary thereof, by reason of such action. b. When a beneficiary of a trust account, or a P.O.D. account payee, is under the age of 18 when the beneficiary or payee becomes entitled to payment as provided in this act, a state or federally chartered bank or savings bank in which the trust account or P.O.D. account is maintained shall make such payment (1) if a certificate of appointment of a guardian is filed with the bank or savings bank, to the guardian of the estate or to the guardian of the beneficiary or payee; or (2) if a certificate of appointment of a guardian is not filed with the bank or savings bank, the bank or savings bank shall prioritize payment as follows: (a) to the beneficiary or payee, if married; (b) to a parent or parents of the beneficiary or payee or to any person having the care and custody of the beneficiary or payee, with whom the beneficiary or payee resides; or (c) to the beneficiary or payee, when the beneficiary or payee attains the age of 18. L. 1979, c. 491, s. 12. Amended by L. 1986, c. 171, s. 1, eff. Dec. 4, 1986. 17:16I-13. Setoff Without qualifying any other right to setoff or lien and subject to any contractual provision, if a party to a multiple-party account is indebted to a financial institution, the financial institution has a right to setoff against the account in which the party has or had immediately before his death a present right of withdrawal. The amount of the account subject to setoff is that proportion to which the debtor is, or was immediately before his death, beneficially entitled, and in the absence of proof of net contributions, to an equal share with all parties having present rights of withdrawal. L.1979, c. 491, s. 13. 17:16I-14. Effect of transfer by right of survivorship Any transfers resulting from the application of section 5 are effective by reason of the account contracts involved and this act, and are not to be considered as testamentary. The right of any surviving party to a joint account, or of any beneficiary, or of any P.O.D. payee, to the sums on deposit on the death of any party to a multiple-party account maintained in any financial institution, shall not be denied, abridged or in anywise affected because such right has not been created by a writing executed in accordance with the laws of this State prescribing the requirements to effect a valid testamentary disposition of property. L.1979, c. 491, s. 14.