In a decision filed April 17, 2008, the Pennsylvania Superior Court turned what we know about wills and joint property on its head. In In re Estate of Amelia J. Piet, the court ruled that joint accounts did not pass to the surviving joint owner because the accounts were made joint after the execution of a will that would have provided a different disposition.
The concept of a 'convenience account' has long been part of the law of the Commonwealth. 20 Pa.C.S.A. §6304 of the Multiple Party Accounts Act provides:
"(a) Joint Account. - Any sum remaining on deposit at the death of a party to a joint account belongs to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent at the time the account is created."
The Allegheny County Orphan's Court, after hearing, found that for the accounts in question, there was no evidence to overcome the statute's presumption and that the accounts passed to the surviving joint owner.
The Superior Court said they would not "blindly adhere" to the section 6304(a) ownership presumption, because the testamentary intent of the testator would be frustrated. (In other words, they are not going to follow the statute.) The court held that the previously executed will "trumps" the joint registration of the bank accounts. Have you ever heard of anything like that?
The court cited In re Estate of Novosielski (a troubling case in its own right - see an excellent discussion of Novosielski and of the Piet case by Attorney Thomas K. Johnson II in Dechert LLP's newsletter) to support its holding even though that case can be readily distinguished on its facts as pointed out in the dissenting opinion.
In a lone dissent, Judge Maureen Lally-Green says "It has been the law for centuries in the Commonwealth that regardless of what is devised in a will and to whom it is devised, a testator can gift away any or all assets during his or her lifetime as long as donative intent and delivery are present. The gifting can occur in many forms from an outright inter vivos gift to a gift that occurs in a joint tenancy with rights of survivorship by the death of one joint tenant and the passing of the gift to the survivor. All such gifts take effect outside of the estate that passes by will."
Further: "I do not believe that the creation of a joint account with a right of survivorship alters the testamentary scheme. Rather, such an account alters the amount of the estate, The execution of a will does not prevent the testator from subsequently altering the amount in the estate as he or she sees fit. such as by the creation of a joint account or through inter vivos gifting."
What do we do now?
Does this mean that whenever we administer an estate we must determine when joint property is created and if it is after the last Will, we must seek to recover it for the estate? Does the same thing apply to beneficiary designations?
Here is the advice of Attorney Thomas K. Johnson II:
"It seems likely that the Pennsylvania Supreme Court or the Legislature will have to address this issue in the near future. For now, however, attorneys, financial institutions and joint account holders need to be aware that they may need to change their current practice to carefully document the creation of any joint account as consistent with a prior will or to anticipate the issue when drafting wills and address the issue of after-created joint accounts by expressly stating that such accounts may be created and are not inconsistent with the testator's wishes."
Thank you to Lancaster Attorney Will Campbell for pointing out this very troubling decision.