1. Estate Planning: Protecting joint tenants against abusive
withdrawals
On Jan. 1, 2013, important amendments to California’s law governing “Multiple Party
Accounts,” including Joint Tenancy Accounts, took effect.
Let us examine how the amendments protect joint tenants from excessive withdrawals by
their other joint tenants.
Generally, while all original parties to a multiple account are alive, each party’s ownership is
based on that party’s own net contributions (deposits less withdrawals).
Also, on a party’s death, any life insurance deposited to the account due to that party’s death
increases his net contributions.
For example, consider a joint tenancy account opened by an adult college student with his
parents to pay college related expenses.
The parents contribute $10,000 of their own community property earnings and the child
contributes his $5,000 student loan.
The parents own two-thirds of the account and the student owns one-third. As the student
withdraws money, his ownership decreases until he withdraws all of his $5,000 contribution.
Subsequent withdrawals are presumed to involve the parents’ contribution, except where
there is clear and convincing evidence to the contrary.
Here the parents gave $10,000 to help son pay his college related expenses. Provided he
used the money for such expenses it is consistent with the parents’ intentions, and they
would not have any right to reimbursement.
What, however, if the college student used some of the parents’ $10,000 for any of a
multitude of unintended reasons?
Then the parents might arguably be entitled to reimbursement of any of their misspent
monies. Further examination is required.
If son paid emergency medical expenses for which the parents would otherwise be held
responsible then a court at its discretion might reduce or eliminate the parents’ claim.
Next, consider a co-habiting unmarried couple who open a joint tenancy account to pay

2. shared living expenses.
Later, if they separate and one withdraws more than his/her net contributions then the other
is entitled to reimbursement. This is new. Previously, one joint tenant could lawfully empty
the entire joint account to the detriment of the others.
Next consider what happens when a party to a multiple party account dies. Each surviving
party retains his proportionate share in the account and also inherits an equal share of the
deceased party’s proportionate share, all as computed at the party’s death. That is
longstanding law.
With a joint account with right of survivorship, any money withdrawn while still alive by a now
deceased joint tenant is not subject to the surviving joint tenants’ right of survivorship; thus,
the deceased tenant while alive can withdraw and transfer his net contributions into a
separate account in his name alone and defeat the surviving joint tenant’s expectation of
inheritance.
Now, under the amended law, the surviving joint tenant receives some protection. That is, if
the deceased tenant’s lifetime withdrawals exceeds his net contributions then the surviving
joint tenant has a right for reimbursement of the excess withdrawal (which depleted the
surviving joint tenants’ contributions). Previously the survivor would simply be out of luck.
Returning to the unmarried couple example, hypothetically speaking if one party withdrew
$6,000 from say his/her $10,000 in net contributions and died, the survivor would receive the
remaining $4,000 in the account contributed by the deceased tenant - in addition of course to
the surviving party’s own net contributions on deposit - but has no rights to the withdrawn
$6,000.
This pdf file was located at Estate Planning: Protecting joint tenants against abusive
withdrawals