General Provisions - Multiple-party Accounts - Probate - CA

Section § 5201

This section addresses who has the legal rights to ownership of money in accounts, like joint bank accounts or ones with payable on death (P.O.D) beneficiaries. It clarifies that these ownership issues are only relevant when resolving disputes between people involved with the account and their creditors or heirs. It doesn't affect who can actually take money out of the account according to the account's terms.

It also refers to another chapter that explains when financial institutions are responsible when they pay money out of these accounts.

(a) The provisions of Chapter 3 (commencing with Section 5301) concerning beneficial ownership as between parties, or as between parties and P.O.D. payees or beneficiaries of multiple-party accounts, are relevant only to controversies between these persons and their creditors and other successors, and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts.

(b) The provisions of Chapter 4 (commencing with Section 5401) govern the liability of financial institutions who make payments pursuant to that chapter.

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Section § 5202

This section states that the rules in this part do not change or impact the existing laws about illegally transferring property to avoid paying debts.

Nothing in this part affects the law relating to transfers in fraud of creditors.

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Section § 5203

This law explains how different types of bank accounts are set up and what happens to the money in them when someone dies. If you create a 'Joint account,' the surviving account holder gets the money. A 'P.O.D. (pay-on-death) account' gives the money to the person named when the account owner dies. For spouses, a 'Joint account with right of survivorship' means the surviving spouse gets everything automatically. A 'Community property account' follows community property laws, which can be affected by a will. Lastly, a 'Tenancy in common account' splits the account among co-owners, and the deceased's share goes to their named pay-on-death beneficiary or their estate if nobody's named.

You don't have to use the exact wording listed to create these types of accounts, as long as the intention is clear and the account setup matches these descriptions.

(a) Words in substantially the following form in a signature card, passbook, contract, or instrument evidencing an account, or words to the same effect, executed before, on, or after July 1, 1990, create the following accounts:

(1) Joint account: “This account or certificate is owned by the named parties. Upon the death of any of them, ownership passes to the survivor(s).”

(2) P.O.D. account with single party: “This account or certificate is owned by the named party. Upon the death of that party, ownership passes to the named pay-on-death payee(s).”

(3) P.O.D. account with multiple parties: “This account or certificate is owned by the named parties. Upon the death of any of them, ownership passes to the survivor(s). Upon the death of all of them, ownership passes to the named pay-on-death payee(s).”

(4) Joint account of spouses with right of survivorship: “This account or certificate is owned by the named parties, who are spouses, and is presumed to be their community property. Upon the death of either of them, ownership passes to the survivor.”

(5) Community property account of spouses: “This account or certificate is the community property of the named parties who are spouses. The ownership during lifetime and after the death of a spouse is determined by the law applicable to community property generally and may be affected by a will.”

(6) Tenancy in common account: “This account or certificate is owned by the named parties as tenants in common. Upon the death of any party, the ownership interest of that party passes to the named pay-on-death payee(s) of that party or, if none, to the estate of that party.”

(b) Use of the form language provided in this section is not necessary to create an account that is governed by this part. If the contract of deposit creates substantially the same relationship between the parties as an account created using the form language provided in this section, this part applies to the same extent as if the form language had been used.

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Section § 5204

This law section allows individuals to create a special power of attorney for managing accounts or services at a financial institution. Such a power of attorney needs to be in writing and signed, clearly naming the person given the power (attorney-in-fact), the bank, and the specific accounts it covers.

The special power of attorney must include a warning about its importance and the right to terminate it. If it's meant to continue even if the person giving it becomes incapacitated, it should explicitly say so. The power of attorney ends if revoked, upon the death of the person who granted it, if the account is closed, or if a guardian is appointed.

Banks can trust these powers of attorney if they have a valid copy on file and can verify the person who signed it, unless they have evidence questioning its validity. The power of attorney only remains valid until the bank is notified of its termination. Attorneys-in-fact must keep records and are liable if they make unapproved disbursements. This law doesn’t stop other types of powers of attorney from being used, nor does it imply bank liability if certain requirements aren't met.

(a) In addition to a power of attorney otherwise authorized by law, a special power of attorney is authorized under this section to apply to one or more accounts at a financial institution or to one or more contracts with a financial institution concerning safe deposit services. For the purposes of this section, “account” includes checking accounts, savings accounts, certificates of deposit, savings certificates, and any other depository relationship with the financial institution.

(b) The special power of attorney under this section shall:

(1) Be in writing.

(2) Be signed by the person or persons giving the power of attorney.

(3) Explicitly identify the attorney-in-fact or attorneys-in-fact, the financial institution, and the accounts or contracts subject to the power.

“WARNING TO PERSON EXECUTING THIS DOCUMENT: This is an important legal document. It creates a power of attorney that provides the person you designate as your attorney-in-fact with the broad powers it sets forth. You have the right to terminate this power of attorney. If there is anything about this form that you do not understand, you should ask a lawyer to explain it to you.”

(d) In addition to the language required by subdivision (c), special powers of attorney that are or may be durable shall also contain substantially the following language:

“These powers of attorney shall continue even if you later become disabled or incapacitated.”

(e) The power of attorney granted under this section shall endure as between the grantor and grantee of the power until the earliest of the following occurs:

(1) Revocation by the grantor of the power.

(2) Termination of the account.

(3) Death of the grantor of the power.

(4) In the case of a nondurable power of attorney, appointment of a guardian or conservator of the estate of the grantor of the power.

(f) A financial institution may rely in good faith upon the validity of the power of attorney granted under this section and is not liable to the principal or any other person for doing so if (1) the power of attorney is on file with the financial institution and the transaction is made by the attorney-in-fact named in the power of attorney, (2) the power of attorney appears on its face to be valid, and (3) the financial institution has convincing evidence of the identity of the person signing the power of attorney as principal.

(g) For the purposes of subdivision (f), “convincing evidence” requires both of the following:

(1) Reasonable reliance on a document that satisfies the requirement of Section 4751.

(2) The absence of any information, evidence, or other circumstances that would lead a reasonable person to believe that the person signing the power of attorney as principal is not the individual he or she claims to be.

(h) The protection provided by subdivision (f) does not extend to payments made after written notice is received by the financial institution as to any of the events of termination of the power under subdivision (e) if the financial institution has had a reasonable time to act on the notice. No other notice or any other information shown to have been available to the financial institution shall affect its right to the protection provided by this subdivision.

(i) The attorney-in-fact acting under the power of attorney granted under this section shall maintain books or records to permit an accounting of the acts of the attorney-in-fact if an accounting is requested by a legal representative of the grantor of the power.

(j) The attorney-in-fact acting under a power of attorney granted under this section is liable for any disbursement other than a disbursement to or for the benefit of the grantor of the power, unless the grantor has authorized the disbursement in writing.

(k) Nothing in this section limits the use or effect of any other form of power of attorney for transactions with a financial institution. Nothing in this section creates an implication that a financial institution is liable for acting in reliance upon a power of attorney under circumstances where the requirements of subdivision (f) are not satisfied. Nothing in this section affects any immunity that may otherwise exist apart from this section.

(l) Nothing in this section prevents the attorney-in-fact from also being designated as a P.O.D. payee.

(m) Except as otherwise provided in this section, the Power of Attorney Law, Division 4.5 (commencing with Section 4000) shall not apply to a special power of attorney under this section. Section 4130 and Part 5 (commencing with Section 4900) of Division 4.5 shall apply to a special power of attorney under this section.

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