Who’s Money Is It Legally? Money in a Bank Account With Multiple Owners

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Planning Attorney

If you are someone who has a bank account with multiple owners, whose names appear on the account (ie Mom and Dad jointly with son, daughter, etc), and you do not want the money to go to the survivor or co-named account holder, be aware that under New Jersey banking law, you may not be able to do this.

Under the Multiple Party Deposit Account Act passed in 1979, N.J.S.A. §17:16I-5, a bank is required to transfer the money to the persons whose names appear on the joint account upon the death of a named account holder.  This is often referred to as a “right of survivorship.”  A similar example is with life insurance or a pension, a Last Will or Trust does not control where the proceeds are distributed upon death of the joint account.  By law, it must go to the other named persons.

If this applies to you, and you wish to change it so that the $ (money) can be passed according to a Will or Trust, you need to change the type of account to a “tenants in common” account.  This requires additional steps to be taken with the bank.  You must first ask the co-account holder(s) whether they wish to go in this direction, because the bank will require them to sign off on this change.  Make sure all owners then sign off while they are still alive to acknowledge the change and their desire to go through with it.

The law is interesting because it is the total opposite of other aspects of New Jersey property law.  If you hold property jointly with another, the law presumes that there is no right of survivorship, and you can pass your interest along through a will or trust to your successors.  To prove the right to survivorship, the law requires you to show that when you obtained title to the property, you intended it to be held in such a way that when one party dies, the property will pass equally to the surviving named account holders. When it comes to opening a bank account with multiple parties; the reverse is true there.

To discuss your NJ Estate Planning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.