Master Recommends That Court Recognize Resulting Trust Instead Of Jointly Titled Bank Account

Delaware Fiduciary Litigation Blog

Posted February 25, 2016

IMO the Estate of James L. Simmons, Sr.; Simmons v. DeRamus, et al. C.A. No. 9965-ML (February 11, 2016)

In this final report, the primary issue presented to Master LeGrow was whether a jointly titled bank account, originally included in an inventory of an estate’s assets, should be treated as a “convenience account” or as a true joint tenancy with a right of survivorship.

In 1976, the decedent established the bank account in question. At the time, the decedent asked his son, James (the executor of his estate), to sign paperwork related to the account. From thereon, James was listed as an account holder with the decedent. Over the next thirty years, they never spoke about the account again. Thirteen years after the creation of the account, the decedent established his will leaving his estate in equal shares to all of his children.

When the decedent died, James, as the executor of the estate, failed to realize the potential significance of the jointly held account. He listed it as an estate asset on an inventory filed pro se and distributed the assets of the estate in accordance with the decedent’s will. However, a dispute arose amongst the beneficiaries which led James to hire counsel who discovered that the account was jointly titled in James’s name. James filed this action seeking repayment of the funds paid to the beneficiaries from the jointly titled account. The beneficiaries filed a counterclaim alleging that James failed to properly administer the estate, including the remaining funds in the bank account.

Relying on the Delaware Supreme Court’s decision in Walsh v. Bailey, the Master determined that the account agreement unambiguously provided that the joint account would be treated as a survivorship account (the account agreement included language that “any joint account established with us is a joint tenancy with right of survivorship”). Therefore, according to the Master, no extrinsic evidence could be looked to for the purpose of evaluating the decedent’s intention in creating the account.

However, the Master held that Walsh did not bar equitable claims to the funds, so the Court could use its equitable powers to impose a resulting trust in such circumstances where: (1) the depositor created a joint account for purposes of convenience; (2) the depositor subsequently executed a will; and (3) the will would be nearly meaningless if the joint held property did not constitute part of the estate. The Master found that the facts of this case met this test. She noted that the bank account constituted a majority share of the estate’s total value, and that the decedent intended to distribute his estate evenly amongst his several children. Also, the Master considered the fact that James himself initially failed to realize that the account was not part of the estate’s assets, having included it in the original inventory.

Consequently, based on the case precedent and the facts before her, the Master recommended that James be recognized as the trustee of a resulting trust for the account, and, after accounting for the remaining expenses of the estate, that he should be required to distribute the assets of the account to the decedent’s intended beneficiaries.

Author(s)

Phillip Giordano
Associate
Gordon, Fournaris & Mammarella, P.A.
Henry Meldrum – Law Clerk