20 HќќѠіђџȱ юћјђџ юџѐѕȱ2014 COMPLIANCE CONNECTION Question: Periodically, depositors request that we add their Ĵ¢ȱȱȱȱȱȱ ȱ of their deposit accounts. Is this a practice that we should discourage? Answer: The question should be analyzed on a case-by-case basis. In most circumstances, however, the practice should be discouraged. ȱȱĴ¢ȱȱȱȱȱȱ ȱȱȱȱȱĴȱ ęǰȱ ȱ¢ȱ¡ȱ the depositor to substantial additional risk. In analyzing a depositor’s request, you should consider, among other factors, the following questions: % What objective is the depositor Ĵȱȱȱ¢ȱȱ ȱĴ¢ȱȱȱȱȱȱ ȱ of the deposit accounts? % Can the depositor’s objective be achieved with a properly drafted ȱȱĴ¢ǵ % Are there any provisions in the bank’s account agreement or other ȱȱ ȱĚȱ with the objective of the depositor? Depositors state myriad reasons for wanting to add someone as a joint owner of their deposit accounts. The two reasons most frequently stated are: (1) a desire to have the balance of the account pass to another person upon the depositor’s death, and (2) the need to have someone else conduct banking transactions on the depositor’s behalf, should he or she become incapacitated. ȱ ȱȱȱȱęȱǰȱȱ joint account would potentially be appropriate. A joint account is “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.”1 Unless there is ȱȱȱȱěȱȱȱ the depositor, “during the lifetime of all parties, a joint account belongs to the parties in proportion to the net contributions by each party to the sums on deposit.”2 Upon the death of a party to a joint account, the “[s]ums remaining on deposit … belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a ěȱȱȱȱȱȱ- count is created.”3 Transfers accomplished in this manner should not to be considered testamentary.4 By their nature, joint accounts have certain associated risks. Notwithstanding the Indiana rule with respect to the ownership of an account during the lifetime of the parties, disputes routinely arise as a result of one party withdrawing all of the funds (or at least more than their share of the funds) from a joint account, without the consent of the other party. For example, in Rogers v. Rogers,5 a father sued his son to recover the money which the son had removed from a joint savings account. In holding in favor of the father, the court noted that there is a presumption that a person who deposits money into a joint account “normally does not intend to make a gift of all or any part of the funds represented by the deposit.”6 In another instance, Moore v. Bow- © 2014 Krieg DeVault LLP THINKING BEYOND TRADITIONAL SOLUTIONS FOR FINANCIAL INSTITUTIONS FOR OVER 130 YEARS Corporate Representation Mergers and Acquisitions &DSLWDO 2ǺHULQJV Regulatory Compliance Supervision and Enforcement New Product Development Litigation Commercial/Consumer Loan Creditors’ Rights Trust Tax Securities Employment Intellectual Property One Indiana Square Suite 2800 Indianapolis, Indiana 46204 p: 317.636.4341 f: 317.636.1507 INDIANA ILLINOIS GEORGIA FLORIDA MINNESOTA www.kriegdevault.com
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