Joint ownership of bank accounts in Florida by husband and wife: when does a spouse's interest in account funds survive their withdrawal by the other spouse?

• Author: Rodriguez, Carlos A.

When Does a Spouse's Interest in Account Funds Survive Their Withdrawal by the Other Spouse?

Few married couples, when opening a joint bank account, appreciate the subtle differences between the possible forms of ownership in which they may hold an account or, much less, the potentially significant consequences that flow from the form they select. For instance, they probably do not realize that the selected form will determine whether their account may be subject to the individual debts of either spouse and whether a spouse's ownership interest in account funds survives their withdrawal and appropriation by the other spouse without the former's consent.

Although the latter issue may arise during the lives of both spouses, oftentimes one spouse, after the death of the other, will discover that the now-deceased spouse had withdrawn funds from, or written checks against, their joint accounts without the other spouse's prior knowledge or consent. The surviving spouse may have also discovered that the deceased spouse either transferred the withdrawn funds to a third person or appropriated the funds to his or her own use by, for example, having deposited them in a separate account or by having the other spouse's name stricken from the joint account.

Upon such a discovery, especially in second marriage situations, the surviving spouse may attempt to recover the withdrawn funds either from the deceased spouse's estate or the third party donee. Generally, in order for a spouse to successfully assert an ownership interest in the funds superior to that of the estate or the donee, that spouse must establish that the account from which the funds were withdrawn was held by the couple as tenants by the entireties (TBE). However, recent cases from the Second and Third district courts of appeal have held that the ownership interests of joint account owners in funds held as joint tenants with rights of survivorship (JTWROS) survive their withdrawal, under certain circumstances, by one of the other account owners.

Although the case law dealing with joint bank accounts and the tracing of funds has been described as being in a state of morass, this author will attempt to distill the cases into some clarifying principles. This article will discuss 1) the nature of an ownership interest in a bank account; 2) the unities and characteristics of the JTWROS and TBE forms of ownership, in general; 3) the application of the TBE form of ownership to bank accounts; 4) the tracing of withdrawn TBE account funds; 5) the split of authority on whether an account owner's interest in JTWROS account funds survives their withdrawal by another account owner; and 6) conclude that, although the legislature or the banking industry may at least lessen the morass of case law by forcing married couples to explicitly designate, upon creation, that a joint account is or is not held by them as TBE, because of the inherent difficulty in applying the TBE concept to bank accounts, this issue will continue to generate litigation.

Nature of Ownership Interest In Bank Accounts

A bank deposit constitutes a chose in action or right to money(1) arising from a contractual relationship between one who delivers money to a bank, the depositor, and the bank which receives it upon the agreement that the deposit will be paid out on the order of the depositor or returned to him or her on demand.(2) It is a debt or loan owing by the depository to the account owner.

At the time a bank account is opened, the depositor indicates the signature or signatures which he or she authorizes the bank to recognize by executing a specimen signature card and other documents the bank may require.(3) Many couples, if not most, execute the signature card in the "disjunctive" (i.e., husband or wife) which, in the bank's eyes, means either spouse may unilaterally withdraw all the funds in the account.

The relationship between the bank and the account owner is generally controlled by the intention of the bank and the account owner at the time the account is opened.(4) Where a deposit account is titled in the names of two or more persons, F.S. [subsections] 655.78(1) and 655.79(1) (1995) provide, in combination, that unless otherwise expressly provided in the agreement or signature card, such an account may be paid to either person and is presumed to have been intended by such persons to pass, upon the death of any of them, to the surviving person or persons.

However, neither these statutes nor the terms of the signature card or other contract between the bank and the account owners is conclusive of the ownership rights as between the account owners. In re Guardianship of Medley, 573 So. 2d 892, 904 (Fla. 2d DCA 1990), appeal dismissed, 629 So. 2d 134 (Fla. 1993); Hagerty v. Hagerty, 52 So. 2d 432, 434 (Fla. 1951). Rather, they serve merely to protect the bank from liability to the account owners in paying out funds. Id.

Unities and Characteristics

A bank account, like any other type of property, may be held by a married couple as JTWROS or as TBE.

* Joint Tenancy With Right of Survivorship

In order to create and maintain the JTWROS form of ownership in real or personal property, the following four unities must exist:(5)

1) Unity of possession (joint ownership and control);

2) Unity of interest (the interests must be the same);

3) Unity of title (the interests must originate in the same instrument); and

4) Unity of time (the interests must commence simultaneously).

In addition, the joint tenancy form of ownership confers on the surviving joint tenant the right of survivorship, provided the instrument creating the joint tenancy expressly provides for it. F.S. [sections] 689.15 (1995). Therefore, in conjunction with the statutory presumption survivorship in [sections] 655.79(1) or a signature card designation of survivorship, a jointly owned bank account that satisfies the four unities listed may be he under the JTWROS form of ownership.

Any act of a joint tenant that destroys any one or more of the four unities operates as a severance of the JTWRO and extinguishes the right of survivorship. Kozacik v. Kozacik, 26 So. 2d 65 661 (Fla. 1946). Thus, a joint tenant may voluntarily sever and terminate the tenancy by, for example, partition or by a conveyance of the tenant's property interest to a stranger, since by such act the unities of title and possession are destroyed.(6) The mode in which join tenants hold the property that is the subject of the estate is described as "per my et per tout," meaning, by the half and by the whole, the effect of which is that for purposes of tenure and survivorship each is the holder of the whole but for purposes of alienation each has only his or her own share, or moiety, which is presumed to be equal.(7)

Although the JTWROS and TBE forms of ownership are very similar in their unities and characteristics, the differences between them carry significant consequences.

* Tenancy by the Entireties

In order to create and maintain a TBE in real or personal property, in addition to the four unities of 1) possession, 2) interest, 3) title, and 4) time, the unity of marriage (or person) must exist. First National Bank of Leesburg v. Hector Supply Co., 254 So. 2d 777, 781 (Fla. 1971). Thus, only a husband and wife may hold property under this form of ownership.

The unity of person element listed above arose from the common law concept that the husband and wife are one person.(8) Thus, each spouse is deemed to own and control the whole estate,(9) or, in other words to be siesed of the entirety and not of a share, moiety, or divisible part.(10) In contrast to the JTWROS form of ownership, the husband and wife, under the TBE form of ownership, are said to hold the property "per tout et non per my," or by the whole and not by the moiety.(11)

Because of this unique unity of person element:

1) Neither spouse, acting...