It is not unusual in probating an estate to find that the decedent’s checking account is held in joint tenancy with one of the decedent’s children. The joint account was usually set up to allow said child to pay the bills of the decedent. The question that arises is whether the funds in said account pass to said child at the time of death due to the joint tenancy ownership of the account. In many cases, said child does not want the account to be transferred to the child and would prefer that the funds be divided among all of the children, equally, who are beneficiaries of the estate.
The Iowa Administrative Code Section 701-86.5(8)(c), sheds some light on this issue. Said section provides as follows:
Joint tenancy-convenience or constructive trust. If the record ownership of bank accounts, certificates of deposit, and other kinds of property are held in the form of joint tenancy, but in fact are held by the decedent and another person or persons who have a confidential or fiduciary relationship with the decedent, the property is not held in joint tenancy but is held in constructive or resulting trust by the survivor for the decedent. A confidential or fiduciary relationship is any relationship existing between the parties to a transaction wherein one of the parties is duty bound to act with the utmost good faith for the benefit of the other party. In its broadest connotation, the phrase embraces those multiform positions in life wherein one comes to rely on and trust another in one’s important affairs. First National Bank v. Curran, 206 N.W.2d 317 (Iowa 1973).
The fact that the decedent furnished the funds to acquire the property or demonstrated a kind, considerate, and affectionate regard for the survivor, does not in itself establish a confidential relationship between the decedent and the survivor. If the evidence to establish a contrary relationship with respect to the property in the form of joint tenancy is not substantial, a joint tenancy exists as a matter of law. Petersen D. Carstensen, 249 N.W.2d 622 (Iowa 1977). If a confidential relationship constituting a constructive or resulting trust is established on behalf of the decedent, the property or property interest that is the subject of the trust is part of the decedent’s gross estate as singly owed property.
In cases where a constructive or resulting trust exists, the property will be treated as the decedent’s individual assets and will be divided pursuant to the provisions of the decedent’s will. The existence of a constructive or resulting trust will avoid the need for the child who is on the joint tenancy account from either disclaiming a portion of the account or making gifts from the account to the other children.