This column first appeared in the San Antonio Express News on February 10, 2016.
Dear Mr. Premack: A couple of years ago my friend put me on his bank account as joint owner in case he died. My friend was divorced and was estranged from his adult kids. He sold his house on an owner finance note. The buyer pays the monthly mortgage into our joint bank account every month. Now my friend has died, without a will – just him telling me what he wanted done with money in the account. I called the bank and told them he died. I asked to take his name off the account but the bank needs a death certificate, which I don’t have. I’ve distributed the account’s money as he told me to, nearly emptying the account. I have not heard from the bank or from his kids (who I don’t know and don’t know where they live). Question: will there be probate court on his case? And if so, what is the disposition of the note payments that have been going into the account? – DWB
Texas law has specific rules and procedures that address your situation. Some of the procedures are hard, some are easy. When you fail to make a legally binding plan for assets you are choosing the hard path. This is especially true when you know there are individuals you want to benefit from your estate to the exclusion of others (as in: friends versus your estranged children).
First, examine the bank account. You say your friend put you onto the account as “joint owner”. That does not tell us anything useful from a legal perspective. In Texas, there is no bank account term “joint owner”.
You may mean “joint tenants”, which legally means that you have the right to access the account but that you do not own any money your friend deposited to the account. He owned it during life, and upon death it passes to his estate (and then heirs under a Will or “heirs at law” if there is no Will).
You may mean “joint tenants with right of survivorship”, which legally means that while he was alive you had the right to access the account but that you did not own any money your friend deposited to the account. He owned it during life. But due to the “right of survivorship” you became owner of the funds in the account on the date of his death.
You may mean “joint tenants with a pay on death designation”, which legally means that while he was alive you had the right to access the account but that you did not own any money your friend deposited to the account. When he died, whoever was named as beneficiary in the pay on death designation owns the account (which is not necessarily you as the joint tenant).
Since the bank has allowed you to continue to make withdrawals from the account, it is likely that this account was joint tenants with right of survivorship. Their request for his death certificate would allow them to treat you as full owner of the account.
You cannot obtain his death certificate because you are not his family. Texas law forbids the vital records office from distributing death certificates to non-family until 25 years have passed from the date of death. If he had made a Will naming you as Executor and Heir, then you would be able to get a death certificate. As it is, you could ask the funeral home if they might provide one to you (doubtful) or you could work with one of his family members who does have the legal right to obtain a death certificate (doubtful).
Second, examine the money in the bank account. If the account was “right of survivorship” or “pay on death” to you, you were within your legal rights to withdraw and distribute the funds. But if the account lacked one of those designations, your withdrawals can be classified as an illegal conversion of the assets. You could be sued for return of the funds to their rightful owners.
Finally, examine the promissory note from the sale of his house. You do not own the note, and it is not payable to you. Monthly payments that go into his account after the date of his death do not belong to you. Instead, the note and payments belong to his heirs at law, who are most likely his children. He could have said otherwise if he had bothered to make a Will. Due to his failure to act, the estranged children inherit that note and the payments. It would be kind of you to track and inform them; or to at least inform the people who purchased his home that they have a big legal problem, need to find those children, and need to have ownership of their note legally determined. It is likely that some form of intestate probate is necessary for the note. Depending on the way the bank accounts were created, some form of intestate probate may be needed for them as well.