Monday, October 12, 2015

Garnishment of joint bank accounts and the co-owner's rights.

On October 1, 2015, Maryland's Court of Special Appeals reminded us that the co-owner of a bank account can fight a garnishment of that account by the creditors of his co-owner.

The joint ownership of property (houses, cars, bank accounts) by non-married  folks does not prevent the judgment creditors (someone holding a money judgment obtained in court) of one owner from grabbing all the money in a joint account. The joint ownership of property by non-married persons is something we often counsel against--it is rarely a good idea. It is very common, for instance, that an elderly parent will put an adult child on a financial account for the convenience of the parent. The parent then relies on the adult child to make deposits, withdrawals, and to pay expenses for the benefit of the parent.

But imagine the parent's shock and surprise when a judgment creditor of the child garnishes the bank account, thus claiming entitlement to all the money. The elderly parent is immediately deprived of all the money.

For those who make this type of arrangement, the risk is that such a garnishment must be fought, in court. It is expensive for the very person who cannot afford the fight- the elderly parent.

Maryland provides relief where the co-owner, such as the elderly parent, claim ownership over the co-owner being garnished:
In approaching ownership of a bank account prior to the death of one of the parties, the current state of the law requires us to look at the intent of the [co-owner] and determine if he intended to make an irrevocable gift of ownership of the account. . . . [T]itling an account as “joint owners” presumptively creates an ownership interest in both parties, but that presumption can be rebutted by evidence of a contrary intent of the original owner of the account. 
The true owner of the money must come to court with clear and convincing evidence that the money is his. He must have proof that withdrawals and expenditures are for his benefit, and not the other persons. The source of the funds can also be used to demonstrate intent, but it is how the money is actually used that will determine the issue.