Provides for joint and survivorship accounts; provides that absent indication to the contrary, funds remaining in such an account upon the death of the depositor shall be deemed part of the depositor's estate.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1578A
SPONSOR: Wallace TITLE OF BILL:
An act to amend the banking law, in relation to establishing joint and
survivorship accounts
SUMMARY OF PROVISIONS:
Section 1. Amends the banking law by adding section 675-a, which deline-
ates the parameters of joint accounts, joint and survivorship accounts,
regulations of the superintendent, and the bill's application.
Section 2: Sets the effective date.
JUSTIFICATION:
Many individuals, especially the elderly, want to have a bank account
which can be drawn upon by another person in addition to the depositor.
Currently, such depositors in New York banks are virtually always
offered, and establish, a Joint Account under § 675 of the New York
Banking Law.
Under § 675 the establishment of such an account is presumptively
considered to create a "Joint Tenancy", which means that it creates two
presumptions: (1) that upon the creation of the account there has been
an irrevocable gift of one-half of the account to the other depositor,
and (2) that upon the death of one of them the balance on deposit vests
in the survivor. Such depositors, however, normally do not realize or
intend that opening such an account results in a gift of one-half of the
account to such other person. And, depending on their family situation
and their overall testamentary plans, they may or may not intend survi-
vorship, i.e., that such other person receive all the remaining funds if
the depositor dies first. This conflict has led to substantial liti-
gation.
In an attempt to remedy this issue "Convenience Accounts" were estab-
lished. Under a Convenience Account the depositor and another person can
withdraw funds for the depositor's benefit, while at the same time
ownership of the funds remains in the depositor and, on the depositor's
death, in the depositor's estate.
Unfortunately, New York depositors are rarely offered these Convenience
Accounts. Employees of New York banking institutions are often not even
aware of the availability of such accounts. This legislation will clari-
fy the property issues as between the depositor and the other person
with respect to the funds in the joint account, and thereby eliminate
unnecessary litigation over the question of the depositor's true inten-
tion on those issues.
PRIOR LEGISLATIVE HISTORY:
2021-2022: A.8002/S.6949 - Referred to Banks/Passed Senate
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
1578--A
2023-2024 Regular Sessions
IN ASSEMBLY
January 17, 2023
___________
Introduced by M. of A. WALLACE, TAPIA, LUPARDO -- read once and referred
to the Committee on Banks -- committee discharged, bill amended,
ordered reprinted as amended and recommitted to said committee
AN ACT to amend the banking law, in relation to establishing joint and
survivorship accounts
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 675-a to
2 read as follows:
3 § 675-a. Joint accounts; joint and survivorship accounts. 1. Joint
4 accounts. (a) When a deposit of cash, securities, or other property has
5 been made or shall hereafter be made in or with any banking organization
6 or foreign banking corporation transacting business in this state, or
7 shares shall have been already issued or shall be hereafter issued, in
8 any savings and loan association or credit union transacting business in
9 this state, in the name of such depositor or shareholder and another
10 person and in form to be paid or delivered to either, or the survivor of
11 them, such deposit or shares and any additions thereto or accruals ther-
12 eon may be paid or delivered to either during the lifetime of both, and
13 such payment or delivery and the receipt or acquittance of the one to
14 whom such payment or delivery is made, shall be a valid and sufficient
15 release and discharge to the banking organization for all payments or
16 deliveries made on account of such deposit or shares prior to the
17 receipt by the banking organization of notice in writing signed by
18 either one of such persons, not to pay or deliver such deposit or shares
19 and the additions and accruals thereon in accordance with the terms
20 thereof, and after receipt of any such notice, the banking organization
21 may require the receipt or acquittance of both such persons for any
22 further payments or delivery.
23 (b) Title to the property on deposit in an account described in para-
24 graph (a) of this subdivision or to the shares issued as described in
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01238-03-3
A. 1578--A 2
1 paragraph (a) of this subdivision is solely in the depositor no matter
2 the source of the property on deposit or used to acquire the shares or
3 when the property was deposited or the shares acquired.
4 (c) On the death of the other person during the lifetime of the depos-
5 itor the payment or delivery to the depositor of any or all of the funds
6 remaining in the account shall be a valid and sufficient release to the
7 banking organization.
8 (d) On the death of the depositor during the lifetime of the other
9 person, the banking organization shall deliver the funds remaining in
10 the account in accord with the contract, signature card, or other docu-
11 ment between the banking organization and the depositor governing the
12 account, which contract, signature card, or other document shall
13 include a provision governing the disposition of the funds remaining in
14 the account on the death of the depositor which shall be in substantial-
15 ly the following form:
16 On the death of the depositor, {name}, the funds in the account shall
17 be disposed of as follows (select one and initial):
18 As part of the estate of the depositor, {name}. (the account is a
19 convenience account)
20 To the other person, {name}. (the account is a survivorship account)
21 (e) If the contract, signature card, or other document does not
22 include such a provision or if it does and the depositor did not select
23 one or the alternative the funds remaining in the account at the depos-
24 itor's death shall be part of the depositor's estate.
25 2. Convenience accounts. If the depositor has designated the inten-
26 tion or it is conclusively presumed that the remaining funds pass as
27 part of the depositor's estate, (a) payment or delivery to the other
28 person of any or all of the funds remaining in the account shall still
29 be a valid and sufficient release to the banking organization if made
30 prior to the receipt by the banking organization of written notice of
31 the depositor's death, and (b) a banking organization which, prior to
32 service upon it of a restraining order, injunction or other appropriate
33 process from a court of competent jurisdiction prohibiting payment,
34 makes payment to the executor, administrator or other qualified repre-
35 sentative of the deceased depositor's estate, shall, to the extent of
36 such payment, be released from liability to any person claiming a right
37 to the funds and the receipt or acquittance of the executor, administra-
38 tor or qualified representative to whom payment is made shall be a valid
39 and sufficient release and discharge of the banking organization.
40 3. Survivorship accounts. If the depositor has indicated the intention
41 that the remaining funds pass to the other person by right of survivor-
42 ship, payment or delivery to the other person of any or all of the funds
43 remaining in the account shall be a valid and sufficient release to the
44 banking organization if made prior to service upon it of a restraining
45 order, injunction or other appropriate process from a court of competent
46 jurisdiction prohibiting such payment.
47 4. Regulations of the superintendent. The superintendent shall promul-
48 gate and may from time to time amend rules and regulations which require
49 that the depositor of a joint account under this section be informed of
50 the terms and conditions of the account, including the relationship and
51 consequences between the parties in the account and the responsibilities
52 of the institution with which the account is established.
53 5. Application. (a) This subdivision or any rule or regulation there-
54 under shall not be deemed or construed as increasing or diminishing the
55 rights or liability of any person or entity.
A. 1578--A 3
1 (b) The provisions of this section shall apply to accounts established
2 on or after the effective date of this section.
3 § 2. This act shall take effect on the thirtieth day after it shall
4 have become a law. Effective immediately, the addition, amendment
5 and/or repeal of any rule or regulation necessary for the implementation
6 of this act on its effective date are authorized to be made and
7 completed on or before such effective date.
