Opinion ID: 2178305
Heading Depth: 1
Heading Rank: 2

Heading: Ownership of the Accounts Under District of Columbia Law

Text: The inclusion of a right of survivorship in an agreement for a joint bank account or similar instrument ordinarily does not meet testamentary requirements. Hence at common law such a provision was not enforceable in probate upon the death of one of the parties to the account. Funds contributed to the account by the decedent were treated as assets of the decedent's estate unless the survivor-claimant established ownership of the funds by virtue of a valid inter vivos gift. These principles found expression in the District of Columbia in the longstanding common law rule that when a party opens a joint account for herself and a second party without consideration, the account is presumed opened for the convenience of the first party, even where the account is specified to be a joint account with right of survivorship. The burden of proof to overcome that presumption was on the party claiming a gift, and when that claim was first asserted after the alleged donor had died, it had to be proved by clear and convincing evidence. See Delaney, 819 A.2d at 990; Davis v. Altmann, 492 A.2d 884, 885 (D.C.1985). In 2001, however, as part of the Omnibus Trusts and Estates Amendment Act of 2000, D.C. Law 13-292, the District of Columbia enacted a version of the Uniform Nonprobate Transfers on Death Act. [3] See D.C.Code §§ 19-601.01 et seq. (Supp.2004). Subchapter I of the Act provides that arrangements in bank account agreements and various other financial instruments for the nonprobate transfer of assets upon death are now nontestamentary. D.C.Code § 19-601.01(a). [4] The effect of this change is that for such transfer arrangements to be enforceable, the instrument does not have to be executed in compliance with the formalities for wills; nor does the instrument have to be probated, nor does the personal representative have any power or duty with respect to the assets. [5] Subchapter II of the Act, D.C.Code §§ 19-602.01-602.27, comprehensively addresses the issues raised under the new regime by financial institution accounts, including checking accounts, savings accounts, and certificates of deposit, in which more than one party has an interestso-called multiple-party accounts. [6] Among other things, Subchapter II identifies different types of multiple-party accounts, recognizes the various purposes for which they might be held, [7] and clarifies the rights and relationships among joint account holders, including survivorship rights. Dennis v. Edwards, 831 A.2d 1006, 1012 (D.C.2003). The provisions of Subchapter II govern account[s] established before, on, or after the effective date of this chapter.... D.C.Code § 19-602.03(b). [8] By its express terms, therefore, Subchapter II governs our treatment of the joint bank accounts before us in the instant appeal even though those accounts were established before the Nonprobate Transfers on Death Act took effect. Because the Council prescribed specifically that Subchapter II applies to pre-existing accounts, we do not follow in this case the traditional presumption against applying statutes affecting substantive rights, liabilities, or duties to conduct arising before their enactment. Landgraf v. USI Film Prods., 511 U.S. 244, 278, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). Instead we follow the principle that `statutes going into effect during the pendency of a case are presumed to be applied in that case unless there is a clear [legislative] intent to the contrary or the application of the law would result in manifest injustice to one party.' Smith v. United States, 847 A.2d 1159, 1161 (D.C.2004) (quoting 2 SUTHERLAND STATUTORY CONSTRUCTION § 41:2, at 379-80 (6th ed.2001)). As an appellate court we adhere to this principle even when the change in the law took effect after the decision on appeal was rendered (which it did not in the present case). See Speyer v. Barry, 588 A.2d 1147, 1154 (D.C.1991). The Nonprobate Transfers on Death Act does not effect a material change in the law with respect to whether the decedent made an inter vivos gift to appellant in this case. The rule embraced by Subchapter II is that [d]uring the lifetime of all parties, an account belongs to the parties in proportion to the net contribution of each to the sums on deposit, unless there is clear and convincing evidence of a different intent. D.C.Code § 19-602.11(b). Thus, as the legislative history explains, [o]ne party owns all if that party is the sole contributor to the account: Evidence of intention by a party to make a gift to another party might change the result, but no intention to make a present gift is imputed from opening an account in two names or from making an additional deposit to an account. JUDICIARY COMMITTEE REPORT, at 42. Under both the common law and the Nonprobate Transfers on Death Act, therefore, appellant had the burden of proving with clear and convincing evidence his claim that the decedent made him an inter vivos gift when she added his name to her Maryland bank accounts. We have no difficulty affirming the trial court's determination that appellant did not meet this burden. See D.C.Code § 17-305(a) (2001). The evidence was undisputed that the accounts were funded and used solely by the decedent during her lifetime. The decedent was the only person who deposited money into the accounts and the only person who wrote checks on the checking account or made withdrawals from the other accounts. The decedent maintained the checks and received all the bank statements. She also paid all the taxes on the interest earned in the accounts. Appellant was not a party to the accounts originally; the decedent added his name in 1994 or 1995 as a substitute for her deceased sister. Appellant was the third sibling to be thus designated. While the decedent was still alive, appellant never spent or took possession of the funds in any of the accounts and never treated them as his own. He did not even know how much money was in the accounts. When appellant was asked on the witness stand if he consider[ed] these accounts to be Josephine Blake's accounts, he answered Yes. All of them. The determination that there was no inter vivos gift is not the end of our inquiry. Reversing the common law presumption, the Nonprobate Transfers on Death Act provides that [r]ights at death ... are governed by the principle that a depositor intends account balances to pass at death to the account survivors unless the account contract provides otherwise. JUDICIARY COMMITTEE REPORT, at 42. [9] Each of the accounts before us here was designated specifically as a joint account with a right of survivorship. The implication of that designation is that on death of a party sums on deposit in [the] multiple-party account belong to the surviving party or parties. D.C.Code § 19-602.12(a). Subchapter II specifies that this right of survivorship may not be altered by will. Id., § 19-602.13(b). A transfer resulting from the application of section 19-602.12 is effective by reason of the terms of the account involved and this subchapter and is not testamentary or subject to estate administration. Id., § 19-602.14. On their face these statutory provisions appear to validate appellant's claim to ownership of the Maryland joint bank accounts. We do not reverse the trial court's judgment, however. Neither the parties nor the trial court considered the provisions of the Nonprobate Transfers on Death Act, and we appreciate that neither the decedent nor, perhaps, appellant himself, may have intended that a nonprobate transfer of the accounts to appellant would take place upon the decedent's demise. We therefore remand the case for further proceedings to afford the parties a fair opportunity to address the question of the Act's effect. We express no opinion on whether grounds exist to avoid the operation of the Act. So ordered. [10]