Paul Martin invested $50,000 in 1998 with Rydex Series Trust.  The account application listed Martin as owner and his daughter, Lia J. Lindsey, as joint owner and provided that joint accounts will be registered as “joint tenants with rights of survivorship” unless otherwise provided.  No funds were contributed to the account by Lia. Later, in 2011-12, the account was retitled as a Guggenheim Investments account.  At all times, the Guggenheim account was owned by Martin and Lia as joint tenants with rights of survivorship. The account statements reflected this ownership as well.

On July 6, 2018, Martin’s wife (Julianne Solomon) initiated a call to Guggenheim and requested that all funds in the Guggenheim account be withdrawn and the account closed.  Solomon “did most of the talking” but Martin did advise during the call that he agreed with the request and authorized the representative to speak to Solomon.  Solomon and Martin were provided with a confirmation number to confirm the redemption occurred.

Unfortunately, on July 9, 2018, Martin died.  On that same day, Guggenheim issued a check to “Paul A. Martin or Lia J. Lindsey” in the amount of $351,878.68. Guggenheim overnighted the check to his address per Martin’s request during the July 6^th phone call.

On August 20, 2018, Solomon endorsed and deposited the check into an estate checking account in her capacity as personal representative of Martin’s estate.  Lia contacted Guggenheim on October 8, 2018 and first learned about Martin’s redemption request and the check.  Thereafter, Lia filed a Verified Complaint to Recover Property Transfer against Solomon in her individual capacity and in her capacity as personal representative.

Lia filed a motion for summary judgment with the trial court, claiming that as the surviving party to the joint account, the proceeds belong to her under Indiana law.  Solomon filed a motion for summary judgment as well, arguing that Lia deposited no funds in the account and withdrew no funds from the account.  Solomon also argued that Martin’s intentions were to liquidate and close the joint account and use the funds to acquire a new marital residence that would be more comfortable for him because he was in failing health.  Lia submitted as evidence a note written by Martin stating “Keep in mind you have access to this $ anytime you want it…Love you, Me.”

After hearing the motions for summary judgment, the trial court entered an order granting summary judgment in Lia’s favor and directed Solomon to distribute the proceeds of the account ($351,878.68) to Lia.  The trial court held that Martin failed to follow the statutory procedure to close the joint account and, therefore, at his death, Martin had cash in a joint account which belonged to Lia as the surviving joint owner.  Solomon appealed the trial court’s order to the Indiana Court of Appeals.

Indiana law [I.C. § 32-17-11-18(a)] provides that sums remaining on deposit at the death of a party (Martin) to a joint account belong to the surviving party (Lia)…as against the estate of the decedent (Martin) unless there is clear and convincing evidence of a different intention at the time the account is created.  This creates a presumption that a survivor to a joint account (Lia) is the intended recipient of the account proceeds.  Indiana law further provides that in order to defeat the survivorship presumption, a challenger (Solomon) must present clear and convincing evidence that at the time of account’s creation, the decedent (Martin) did not intend the surviving joint holder (Lia) to receive the proceeds or that the original intent of the decedent (Martin) for the joint account holder to receive the proceeds changed before death and was communicated in writing to the financial institution.

Pointing to a prior case which had similar facts, the Court of Appeals held that a phone call could not serve to terminate the joint account.  Also, the Court pointed to I.C. § 32-17-11-9, which provides that the form of ownership of a joint account may only be altered by a signed, written order given to the financial institution during the party’s lifetime.  Because Martin did not take the appropriate steps to change the form of the account when he withdrew the funds, the Court held that the rights of survivorship are determined by the form of the account at the death of a party.  Even though Martin withdrew all of the funds prior to death, this alone did not overcome the presumption that Lia was the intended recipient of the proceeds in the account as the surviving joint owner.  The Court found that there was no dispute that Martin failed to communicate in writing to Guggenheim that his intent had changed.  Therefore, when Martin died, the form of the account was a joint account with rights of survivorship in Lia per I.C. § 32-17-11-18. The Court of Appeals ruled in Lia’s favor and affirmed the trial court’s decision.

This case is a reminder that Indiana’s laws governing joint accounts should be reviewed and precisely followed in order to accomplish severing a joint account during lifetime.  Otherwise, the wishes and goals of the client may not be accomplished and lead to unintended results.

 

Should you have specific questions regarding the above, please contact Benjamin T. Ballou at Hodges and Davis, P.C.

 

Hodges & Davis, P.C.- March 2021