When it comes to making purchases with joint accounts, you can't make any assumptions about who then owns the property.
Like many couples, Mr. and Mrs. Connell established a joint checking account with a right of survivorship. With the exception of a $205 contribution from his wife, Mr. Connell used funds from that account to acquire a $58,350 Rolex watch. He also used money from that account to fund an upgrade from a ring worth approximately $2,000 (a gift from his wife) to a three-carat diamond ring worth approximately $19,000. When Mr. Connell died, the Personal Representative of his Estate counted the watch and the ring among his assets, but Mrs. Connell disagreed. She believed that the watch and ring were hers, passing to her by right of survivorship upon her husband’s death.
Mrs. Connell was wrong, said a Florida District Court of Appeal. Connell v. Connell, Case No. 2D11-4139 (2nd District, August 1, 2012). Once funds are withdrawn from an account held jointly with a right of survivorship, those funds become the property of the withdrawer. It was immaterial that the Connells’ prenuptial agreement directed that property “acquired jointly or in their joint names shall become and be considered joint property of the parties” because the circumstances evinced no intention that the watch or ring be jointly owned. Mr. Connell wore both daily before being hospitalized, ensured their safekeeping, and Mrs. Connell called them “his.”
Tough luck for Mrs. Connell, but her case encourages consideration of an important estate planning issue: the titling of tangible personal property and the titling of tangible property, like investments and bank accounts. Joint accounts with rights of survivorship are not limited to spouses, but are sometimes between a parent and child, or between business partners or siblings. While these type of joint accounts can avoid probate, they often times have unintentional consequences, such as accidential inheritance, family fights, and extra estate or inheritance taxes. Furthermore, in second marriage situations, as in Connell, purchasing property with joint funds does not cause the property to be jointly held; a court is likely to look to circumstances surrounding the transaction and to the use of the property to determine the parties’ intentions.