What is CAMPAL?
California’s Multi-Party Accounts Law (“CAMPAL”) regulates the ownership interest of individuals with joint bank accounts. (Prob. Code, § 5100.) The California Legislature enacted CAMPAL in 1990; now, CAMPAL applies to all accounts existing on, and established after, July 1, 1990. (Prob. Code, § 5205.)
CAMPAL aims to make property transfers on death without probate easier, specifically for small estates, by determining the rights of involved parties, before and after death, and protecting financial institutions from liability when statutory proceeds are followed. (Cal. Prac. Guide Probate Ch. 2-C. Multiple-Party Accounts.)
Types of Multi-Party Accounts
A multi-party account can be a joint account, a pay on death account (“POD”) or a Totten trust account. (Prob. Code, § 5132.)
Under the California Probate Code:
- A “Joint Account” is an account payable to multiple parties, regardless of whether it includes a right of survivorship. (Prob. Code, § 5130.)
- A “POD account” is an account who’s balance transfers upon death. (Prob. Code, § 5140.) A POD account can be accessed by one or more person’s during their lifetime(s) and transfers on their death(s) to one or more payees. (Id.)
- A “Totten trust account” is an account, for a trust that only holds money, set up by one or more people as trustees, for one or more beneficiaries. (Prob. Code, § 80.) Totten trust accounts are created using deposit agreements with the bank, meaning, regular trusts created by wills or separate trust agreements, or other fiduciary accounts, are not Totten trust accounts. (Id.) The deposit agreement does not need to name beneficiaries to create a valid Totten trust account. (Id.)
Under CAMPAL, the Right of Survivorship is determined by the type of multi-party account and as such, does not require a writing for its creation or enforcement. (9 Cal. Jur. 3d Banks § 147.) Once a right of survivorship is established it cannot be changed by any party’s will or other testamentary document, however, the right of survivorship is not guaranteed to all forms of multi-party accounts. (Prob. Code, §§ 5302, 5303.) For example, if a multi-party account is held as a Tenancy in Common Account, there is no Right of Survivorship unless the formal agreement explicitly provides for one. (Prob. Code, § 5306.) Additionally, the right of survivorship extinguishes when a party possesses and exercises the present right to withdraw funds from the joint account. (Prob. Code, § 5303(c).)
CAMPAL and Financial Institutions
Financial Institutions are entitled to enter multiple-party accounts to the same extent they enter single-party accounts. As such, any multiple-party account can be paid, on request and according to its agreement’s terms, to any member of the parties. (Prob. Code, § 5401(a).) CAMPAL affords financial institutions protection from liability for making payments to account parties or successors in accordance with the law, while simplifying non-probate transfers on death. (Stevens v. Tri Counties Bank (Cal. Ct. App. 2009) 177 Cal.App.4th 236, 243-44.)
Under CAMPAL, financial institutions are not required to:
- Ask about the source of deposited funds
- Ask about the intended use of any amount withdrawn from the joint account
- Determine each party’s net contribution; or
- Restrict withdrawals, or any other use of the account, based on each party’s net contributions, regardless of whether the financial institution has actual knowledge of those contributions. (Prob. Code, § 5401(c).)
Accordingly, financial institutions are protected from liability if payments are made in compliance with statutory conditions, unless a restraining order was served prior to the payment and subsequently ignored. (Prob. Code, § 5405(b).) This protection from liability does not affect any account holder’s rights in disputes between themselves or their successors regarding the funds in, or withdrawn from, a multi-party account. (Stevens 177 Cal.App.4th at 245 citing Prob. Code, § 5405(d).)
In Lee v. Yang a dispute arose between the owners of a joint account regarding the exercise of the account’s agreement terms by a joint owner. ((2003) 111 Cal.App.4th 481, 490.) In Lee the Court of Appeals affirmed the judgment by finding that CAMPAL governed the joint account, subsequently permitting withdrawal of funds by a joint owner where no legally enforceable oral agreement restricting such action existed. The parties in Lee maintained an account consisting of a prima interest checking account, an investment certificate of deposit, and a regular savings account, all of which were subject to one master agreement signed by both parties. The master agreement explicitly stated:
“If more than one person signs below, all accounts are held in joint tenancy with right of survivorship unless you specify another type of ownership under account names below: … We may pay out funds on any one of the signatures below (unless you specify another number here ___________.” (Id. at 489.)
The court found the agreement established existence of a multi-party account meeting the statutory definition of CAMPAL, and citing the agreement clause, held defendant had the right to withdraw funds as a joint account owner. Under the same clause and CAMPAL’s governing principles, plaintiff failed to establish defendant’s withdrawal right was restricted by a preponderance of the evidence, and therefore had no right to reimbursement of the withdrawn funds. (Id. at 490.) Lacking any evidence contradicting the agreement’s intent, the financial institution properly allowed defendant to withdraw funds from the joint account as a joint owner under CAMPAL by adhering to the express terms of the governing agreement.
What is an Example?
“Shawn” and his daughter “Julie” opened a joint savings account at a California bank. Shawn and Julie have equal access to the account and set the account up as a joint account with a right of survivorship. The right of survivorship means that when either Shawn or Julie die, the surviving account holder will automatically become the sole owner of the account’s funds. Both Shawn and Julie signed the necessary bank forms to create the account.
Julie is primarily responsible for the account, but her elderly father Shawn, occasionally makes deposits and withdrawals. Shawn and Julie maintain the account this way, until Shawn passes away unexpectedly.
Because Shawn and Julie set up the account with a right of survivorship, the account’s funds automatically pass to Julie under the California Multi-Party Accounts Law, without the need for probate. Probate is the legal process for settling an estate. Now, Julie must only go to the bank with Shawn’s death certificate, for the bank to release the account’s funds to her as sole owner per the joint account’s terms.
If Shawn and Julie had not included the right of survivorship with their joint account, and instead held the funds in a Tenancy in Common, Shawn’s share of the account would go through probate to be distributed under Shawn’s Will or Intestacy laws, if no will existed. In this scenario, Julie would have to petition the probate court to claim her portion of the funds and Shawn’s portion would pass according to the terms of his estate plan.
Conclusion
The Underwood Law Firm has a team of experienced lawyers who can help resolve your real property issues as they relate to partition and help you pursue solutions to ensure your property rights are protected. We are here to help.