Tennessee Supreme Court Clarifies Law Regarding Ownership of Funds Withdrawn from a Joint Bank Account

December 6, 2017

The Tennessee Supreme Court has unanimously ruled that, when one spouse unilaterally withdraws money from a married couple’s joint bank account and places the funds in a certificate of deposit, the funds are no longer joint property and belong to the spouse to whom the certificate of deposit was issued.

In April 2012, Calvert Hugh Fletcher and his wife, Nelda Karene Fletcher, deposited funds in a joint checking account designated with a right of survivorship. The joint account card required only one signature to withdraw funds. Later, Mr. Fletcher withdrew $100,000 from the account and deposited the money in a certificate of deposit held only in his name. After he died, a dispute arose between Mrs. Fletcher and Mr. Fletcher’s children from a previous marriage regarding ownership of the certificate of deposit. The Putnam County Probate Court ruled that the funds belonged to the husband’s estate because the funds ceased to be joint property when withdrawn from the joint account. Mrs. Fletcher appealed, and the Court of Appeals ruled the funds belonged to her because the money could be directly traced to the joint account.

After reviewing cases from Tennessee and other states, the Supreme Court held that, once a husband or wife withdraws funds from a joint bank account held as tenants by the entirety, the funds cease to be held by the entirety. The Supreme Court found this approach provides the clarity and finality needed in the current banking environment, noting it would be difficult for a third party receiving funds to know the source of the money and if someone else has an ownership interest in the funds.

In an opinion authored by Justice Sharon G. Lee, the Court held that the certificate of deposit issued to Mr. Fletcher from money withdrawn from the couple’s joint bank account was owned by Mr. Fletcher at his death and, therefore, was not owned by Mrs. Fletcher, but became a part of Mr. Fletcher’s estate and passed under the terms of his will.

To read the unanimous opinion in In Re Estate of Calvert Hugh Fletcher, authored by Justice Sharon G. Lee, visit the Opinions section of TNCourts.gov.