Joint Accounts and the Dead Man’s Act: Which Witnesses Are Competent?July 18, 2019 – Articles The Legal Intelligencer
Even for seasoned Orphans’ Court practitioners, the Dead Man’s Act is a difficult statute to navigate. The statute becomes even murkier when discussing it in conjunction with joint accounts, and the ability of surviving account holders to testify about both their interactions with a decedent and the intent behind the account. Fortunately, a handful of Pennsylvania cases carve out this ability to testify for surviving joint account holders, using both the traditional analysis of who represents a decedent’s interests on death and invoking the devisavit vel non exception to the Dead Man’s Act.
The Dead Man’s Act is a substantive rule of law in Pennsylvania, designed to prevent a surviving party to a transaction from testifying adversely to a deceased party, “since he could lie and attempt to testify favorably to himself and adversely to the deceased party, knowing the other party is incapable of contradicting the fallacious testimony.” See In re Fiedler, 132 A.2d 1010, 1024 (Pa. Super 2016) (citing Punxsatawney Municipal Airport Authority v. Lellock, 745 A.2d 666, 670 (Pa. Super. 2000)). The Dead Man’s Act serves as an exception to the general rule in Pennsylvania that all witnesses are competent to testify except in certain limited circumstances (citing Larkin v. Metz, 580 A.2d 1150, 1152 (Pa. Super. 1990)).
The Dead Man’s Act states: In any civil action or proceeding, where any party to a thing or contract in action is dead … and his right thereto or therein has passed, either by his own act or by the act of the law, to a party on the record who represents his interest in the subject in controversy, neither any surviving or remaining party to such thing or contract, nor any other person whose interest shall be adverse to the said right of such deceased … party shall be a competent witness to any matter occurring before the death of said party.
Three conditions must be met for a witness to be incompetent to testify under the Dead Man’s Act: the deceased must have had an interest in the immediate result of the suit; the interest of the witness must be adverse to the decedent; and a right of the deceased must have passed to a party of record who represents the deceased’s interest, see Estate of Rider, 409 A.2d 397, 399 (Pa. 1979); see also Estate of Hendrickson,130 A.2d 143, 146-47 (Pa. 1957). The party challenging competency has the burden to prove that the witness is incompetent under the act.
The key issue in deciding if the Dead Man’s Act bars a witness’ testimony is whether the intended witness’ interests are adverse to or aligned with a decedent’s interest. Generally, the personal representative or executor of an estate most clearly represents a decedent’s interests. But, the issue becomes slightly more complicated when the decedent creates a joint bank account with a third party that passes separate from any testate or intestate transfers. The court is faced with determining to whom the Dead Man’s Act applies to render their testimony incompetent—the personal representative of the decedent’s estate, or the surviving joint account holder.
In making this determination it is imperative to consider the Multi-Party Account Act (the MPAA), 20 Pa.C.S. Section 6301, which the Pennsylvania Supreme Court has acknowledged “evinces a legislative intent that joint accounts are to be generally governed and interpreted separate and apart from provisions governing wills.” See Estate of Novosielski, 992 A.2d 89, 101 (Pa. 2010). To that end, Section 6303 of the MPAA states that “a joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sum on deposit, unless there is clear and convincing evidence of a different intent.” While the joint account belongs to each party in proportion to the amount they contributed during their lifetimes, “any sum remaining on deposit at the death of a party to a joint account belongs to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent at the time the account is created.” Section 6304 thus creates a presumption of survivorship in joint accounts, and operates as a valid disposition at death. The MPAA then goes one step further and makes clear that the presumption of survivorship cannot be changed by will. Indeed, joint accounts “are occasionally referred to as a ‘poor man’s will’ …and provide a simple and inexpensive method of passing funds in the account from a deceased joint owner to the surviving joint owner, avoiding the necessity of probate proceedings.” See Deutsch, Larrimore & Farnish v. Johnson, 848 A.2d 137, 142-43 (Pa. 2004).
While the MPAA presents a “simple and inexpensive method” to pass funds from a decedent to a third party outside the probate process, it begs the question of whose interests are aligned with a decedent’s under the Dead Man’s Act—the personal representative of the estate or the surviving joint account holder?
Pennsylvania courts have dealt with this issue in one of two ways. First, in earlier cases, courts held that because the joint account passes outside of a decedent’s estate, a decedent’s personal representative—not the surviving joint account holder—is adverse to the decedent. Thus, the surviving joint account holder is competent to testify about their interactions with the decedent and their intent behind the joint account, while the personal representative must remain silent, as inManiero v. Ward, 14 Fid.Rep.2d 373 (O.C. Allegheny Cnty. 1994).
In Maniero, the Orphans’ Court analyzed the interplay between the Dead Man’s Act and the MPAA in a dispute involving ownership of joint certificates of investment in the name of decedent and a surviving party. The executrix of the estate claimed that the certificates of investment belonged to the estate after the decedent’s death, while the surviving party claimed they belonged to her under the MPAA. The Orphans’ Court rejected the executrix’s claim, holding not only that the surviving party “became the sole owner of the account upon the death of the decedent,” but also that the executrix was deemed incompetent to testify about the certificates of investment under the Dead Man’s Act, and not the surviving party. The court reasoned that the surviving party “stood in the shoes of decedent and executrix, estate beneficiary … whose pecuniary interest [was] adverse [could]not testify.” See Dickey v. Kundrat, 4 Fid.Rep. 2d 367, 368 (O.C. Dauphin Cnty. 1984).
Second, and more recently, Pennsylvania courts have invoked the elusive devisavit vel non exception to the Dead Man’s Act. Under this exception, where an issue is “devisavit vel non, or be any other issue or inquiry respecting the property of a deceased owner, and the controversy is between parties respectively claiming such property by devolution on the death of such owner … all persons shall be fully competent witnesses.” “Devolution” historically has meant “the transfer of decedent’s property both by operation of law and by will.” SeeIn re Estate of McClain, 392 A.2d 1371, 1375 (Pa. 1978). In other words, in a will contest where two parties are claiming rights to a decedent’s property, both parties—the personal representative and a surviving third party—are competent to testify. The Pennsylvania Superior Court, however, has broadened the definition of devolution to include transfer of assets in a joint bank account, as in Pagnotti v. Old Forge Bank, 631 A.2d 1045 (Pa. Super. 1993). Thus, when a personal representative of a decedent’s estate and a surviving party to a joint bank account with a decedent are both claiming rights to the remains of the joint bank account, both parties are competent to testify. (“Following the decedent’s death, appellant and appellee each claimed a right to the money in the account … Each party was claiming the right to the money in the bank account by devolution following the death of decedent. Therefore, all witnesses in the present action were competent to testify.”).
These two scenarios demonstrate the likelihood that a surviving joint account holder will have to testify about their interest in a joint account as against competing claims by a personal representative of an estate. And, given the Superior Court’s broadening of the definition of “devolution,” both the surviving joint account holder and the personal representative will be competent witnesses. Thus, the Dead Man’s Act will not be an obstacle to either party’s ability to prosecute their claim.
Reprinted with permission from the July 18 issue of The Legal Intelligencer. (c) 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.