In Bank of America, N.A. v. Eisenhauer, a husband and wife set up a certificate of deposit account with a bank where the account was a survivorship account and also had payable on death beneficiaries. No 14-0486-CV, 2015 Tex. LEXIS 1005 (Tex. October 30, 2015). So, after one spouse died, all of the funds would belong to the other spouse. When the second spouse died, any funds remaining in the account would go to the named beneficiaries. The bank paid proceeds from the account after the husband’s death to the beneficiaries but before his wife’s death. The wife later died, and her estate sued the bank for breaching the account agreement in making the early distribution. The jury returned a verdict for the bank, but the trial court directed verdict for the estate. The court of appeals affirmed the trial court’s judgment.
The Texas Supreme Court held that whether the funds stayed in the account until the surviving spouse died or were distributed before then, the estate received exactly the same from the account: nothing. The Court reversed the lower courts and rendered judgment on the jury’s verdict holding that there was no evidence of any damages.
Interesting Note: The Court noted that there was no evidence that the wife ever attempted to withdraw any funds from the account after her husband’s death. Funds in an account belong to the person that deposited them. After the husband died, all of the funds belonged to the wife due to the survivorship language. Accordingly, the wife could have withdrawn all of the funds in the account at any point up to her death. If she had, and the funds were not present, then she or her estate could have been be harmed by the bank’s error in distributing the funds early. But, funds in a survivorship account pass non-probate. So, because those funds do not go into an estate, an estate generally has no standing to assert claims based thereon. Because the estate had no evidence of any attempt to withdraw the funds and because it otherwise did not have any claim to the funds, it was not harmed by the bank’s unintentional breach of the account agreement.
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