When a loved one passes away, disputes can arise over who is entitled to the remaining funds. This can extend itself into bank accounts that the decedent may have held jointly with a spouse.
If the account was jointly held, did the signature card create a legally binding survivorship agreement? The case of Shaw v. Shaw, No. 835 S.W.2d 232 (Tex. App. 1992) demonstrates how Texas courts interpret bank documents when determining survivors’ rights and the distribution of financial assets.
Facts & Procedural History
This dispute involved two bank accounts held jointly by a married couple. When the accounts were opened, the signature cards designated the accounts as “Joint with Survivorship.”
When the decedent passed away, his wife claimed a right to the funds as the surviving account holder. However, the decedent’s daughter, acting as the executrix, sued to recover the money for the estate. She argued the signature cards alone did not create a valid survivorship agreement under Texas probate law.
The trial court ruled in favor of the decedent’s wife, finding the signature cards sufficiently evidenced an intent to create a survivorship interest. As a result, the decedent’s daughter appealed this decision.
Texas Law on Survivorship Agreements
A survivorship agreement is contract between parties providing that property passes to the survivor upon death of the other. Under the Texas Estates Code, a survivorship agreement regarding property must meet certain requirements to be valid:
- It must be in writing and signed by all parties
- It must contain language expressly stating the parties’ intent to create a survivorship interest
- It must clearly provide for the right of survivorship
The law also specifies that use of a form contract by itself does not create a survivorship right. There must be additional evidence of intent.
If these requirements are met, then upon the death of one party to the agreement, the surviving party will automatically become the sole owner of the property. The decedent’s interest in the property will pass outside of probate and will not be subject to any claims from creditors or heirs.
In this case, the decedent’s wife argues that the bank signature cards are a valid survivorship agreement between her and the decedent. However, it is simply a document that lists the authorized signatories for a bank account and identifies the individuals who are authorized to sign checks and make other transactions on behalf of the account holder. It does not designate who will become the account holder in the event of death.
Alternatives to Survivorship Agreements
If the decedent had wished for his wife to receive the financial assets upon death, he should’ve made a proper survivorship agreement with her. Alternatively, he also could’ve specified it in his will.
Apart from survivorship agreements, other alternatives are:
- Community Property with Right of Survivorship – spouses can hold community property with rights of survivorship
- Payable on Death Accounts – bank account funds pass to designated beneficiary upon death
- Joint Tenancy with Right of Survivorship – joint property owners hold equal interests with right of survivorship
This case illustrates that Texas courts will stringently apply the statutory requirements to determine if a survivorship agreement exists. Beneficiaries should not assume that common bank account titling conventions are necessarily sufficient. Relying solely on designation of an account as “joint with survivorship” on a signature card or other bank form is not enough.
Parties wishing to create survivorship rights in a bank account should execute a formal written agreement, separate from any bank forms, that expressly states their intent and right of survivorship. This provides unambiguous evidence of intent if the agreement is later challenged. In the event that they do not want to create a survivorship agreement, other alternatives exist.
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