Trust - May a trust control how the proceeds of joint accounts not owned by the trust be distributed?

Return to Citizen Questions Menu
Return to Calhoun County Courts Home Page

Question

It is my understanding that Michigan requires a formal transfer of title on assets that are to be considered trust assets. If a trust provision states:

I have placed some of my assets in the joint names of myself and one or more of my adult children, I may do so in the future. Notwithstanding any such joint ownership, it is my intention and desire that all assets I own at the time of my death be distributed according to the terms of this trust.

Decedent placed one adult child's name on a number of his accounts joint with survivorship 3 days prior to the date of the trust but did not transfer the title on these accounts to the trust. Does the trust control because of the 3 day time frame or is it the law that the trust provision can not govern assets it does not own?

Answer

Generally, the surviving owner of a joint account would become the owner of the account upon the death of the decedent. Since the asset was never the property of the trust, the asset can not be controlled by the language of the trust.

However, if it can be shown that the decedent did not intend the account to become the property of the survivor then it will become the property of the estate. This is what is often referred to as a convenience account. Such an account is usually set up so that bills may be paid by the joint holder for the convenience of the other account holder with no intent that the money should go to the survivor. There are many recorded cases where the issue of whether the joint account is or is not a convenience account have been litigated.

A joint bank account may also not become the property of the survivor if one of the following circumstances can be proved:

1. When the account was opened, decedent did not have the mental capacity to know or understand that the account would become the property of the survivor

2. The account was created as a result of fraud

3. The account was created as a result of undue influence.

Also if the owner of the joint account was also a party to the trust, he or she may be obligated to follow the terms of the trust to which he or she may have agreed.

I would strongly suggest that you consult an attorney. Once the attorney knows all of the facts, he or she can advise you how to proceed and what the likely outcome may be.

Return to Citizen Questions Menu

Return to Calhoun County Courts Home Page

Last Updated: 12-12-07

Send your comments, questions and suggestions to Phil Harter at 161 E Michigan Avenue, Battle Creek, Michigan 49014 or e mail to pharter@calhouncountymi.gov