The case of Jordan v. Jordan (unpublished) represents another example of a legal challenge to the validity of a joint account with right of survivorship that was established very soon after the person establishing the joint account executed his Will.

The case presents a simple scenario. A executed a Will that divided A’s Estate equally between A’s four (4) children. Soon after signing the Will, A goes to the bank with one of the four (4) children and opens a joint account with right of survivorship with that child.

A subsequently dies, and A’s three (3) other children challenge the validity of the joint account with right of survivorship, contending that the account violated A’s intent as reflected in A’s Will.

In this case, the allegations ranged from undue influence, to incompetency, to the violation of a fiduciary relationship (by the child who was included in the joint account). However, the Plaintiff’s did not offer any evidence, by affidavit or otherwise, to support their allegations.

The Defendant (the child included in the joint account) relied on the bank signature cards that were executed when the new account was opened plus an affidavit by the bank employee who handled the opening of the joint account.

The trial court granted Defendant’s Motion for Summary Judgment, and the Court of Appeals affirmed the ruling of the trial court.

The opinion did not disclose the amount of the funds involved in the joint account. However, it must have been sufficient to trigger a lawsuit as well as an appeal to the Court of Appeals. Then again, the challenge to the validity of the account may have been based on principle rather than the amount in the account.

The moral of the story is that when a joint account with right of survivorship is created soon after an individual signs a Will providing for the equal division of his or her estate, and the joint account includes the individual and only one of the individual’s heirs/beneficiaries, the chances are good that the validity of the joint account will be challenged following the individual’s death.

This is similar to, but different from, those situations where an individual inadvertently establishes a joint account with right of survivorship with one of the individual’s beneficiaries rather than a personal agency (Power of Attorney) account. The individual’s intent is to authorize someone else to write checks on the account rather than to have the funds in the account pass to the surviving joint owner upon the individual’s death. Either of these scenarios contains the potential for a legal challenge to the validity of the joint account upon the individual’s death.

A written statement clearly indicating the individual’s intent to establish a bona fide joint account with right of survivorship, might avoid a legal challenge to the validity of the account following the individual’s death.

The case of In The Matter Of Frances Sorrentino Taylor, deceased contains a good discussion regarding the appropriate procedure for filing claims against an estate and also the deadlines that apply to such claims. In addition, the opinion discussed the authority of the Clerk of Court to determine the reasonableness of attorneys’ fees incurred in an estate administration context. This article discusses the Clerk’s authority to determine the reasonableness of attorneys’ fees in estate administration.

In the case in question, the decedent left four (4) surviving children, all of whom were beneficiaries of the Estate.

One of the children qualified as the Executor of the Estate.

The administration of the estate proceeded normally until one of the children submitted a claim against the Estate for caregiving services she allegedly provided to the decedent before the decedent’s death. At that point, the Executor retained legal counsel to assist the Executor in the administration of Estate and also to defend the claim filed by one of the beneficiaries.

In due course, the Executor filed the Final Account which included disbursements from the Estate to pay legal expenses in the total amount of $91,340.77. This figure was allocated as follows: $16,927.67 for probate related matters; $35,150.85 for litigation related matters, and $39,262.22 in fees that were not specifically designated for either probate related matters or litigation related matters.

One of the beneficiaries filed an objection to the Final Account, contending that the amount of the legal fees was excessive.

The Clerk of Court conducted a formal hearing and entered an order approving attorneys’ fees in the amount of $26,211.31.

The Clerk’s order was appealed to Superior Court and the Superior Court Judge entered an order vacating the Clerk’s order and approving the payment of the total amount of attorneys’ fees requested ($91,340.77).

The order of the Superior Court Judge was appealed to the North Carolina Court of Appeals.

At the onset, the Court of Appeals observed that, when an order of the Clerk is appealed to Superior Court, the scope of review of the Superior Court is limited to determining:

1. Whether the findings of fact are supported by the evidence.
2. Whether the conclusions of law are supported by the findings of fact.
3. Whether the order or judgment is consistent with the conclusions of law and the applicable law.  G.S. § 1-301.3(d).

The Court of Appeals described the issue presented by the appeal as follows: did the Superior Court err by exceeding its limited power of review and vacating the Clerk’s order limiting the amount of attorneys’ fees to be paid to legal counsel?

The Court noted that the Clerk, in reducing the amount of attorneys’ fees requested, took the position that the Clerk had the authority to review the attorneys’ fees for reasonableness. The Superior Court, in reviewing the order of the Clerk, had ruled that the Clerk had no authority to determine the reasonableness of the attorneys’ fees.

The Executor contended that the authority of the Clerk to review the reasonableness of attorneys’ fees differs, depending upon (1) whether the personal representative of the estate is an attorney and is charging attorneys’ fees in addition to seeking a commission as the PR, or (2) whether the PR retains an attorney to assist the PR in the administration of the estate.

The Executor contended that in the former, the Clerk has the authority to review the reasonableness of attorneys’ fees. In the latter, the Clerk does not have authority to review the reasonableness of attorneys’ fees.

The Executor argued that in the latter, the Clerk’s authority is limited to the “ministerial task” of simply determining if the entries in a submitted account reflect actual receipts and disbursements by the PR. G.S. § 28A-21-1 and G.S. 28A-21-2.

The Court of Appeals rejected this argument. The Court noted the absence of a statute specifically addressing the payment of attorneys’ fees to a lawyer who is retained by the PR to assist the PR in administering an estate. However, there is a statute authorizing a PR to retain legal counsel. G.S. § 28A-13-3.

In contrast, where the PR is an attorney and is charging legal fees over and above a commission, G.S. § 28A-23-4 specifically sets forth a procedure for the allowance of attorneys’ fees. In this context, where the PR is charging a legal fee and is also claiming a commission, the Clerk is authorized to assess the reasonableness of the attorneys’ fees. Of course, there is also statutory guidance regarding the amount of the PR’s commission.

The Executor in the case in question contended that, in the absence of specific statutory authority, the Clerk had no authority to review the reasonableness of the attorneys’ fees in those situations where the PR retains legal counsel to assist the PR in the administration of the estate.

The Court of Appeals held that the Clerk has specific statutory authority to allow “reasonable sums for necessary charges and disbursements incurred in the management of the estate.” G.S. § 28A-23-3(d)(1). Further, the Court noted that attorneys’ fees incurred in connection with the administration of an Estate fall within this statutory provision.

Thus, the Clerk does have statutory authority to review attorneys’ fees for reasonableness when the fees are incurred by legal counsel retained by the PR.

The Court of Appeals remanded the case to the Clerk with directions to make appropriate findings of fact and conclusions of law to support the Clerk’s determination regarding the reasonableness of the attorneys’ fees.

The Court of Appeals noted that the North Carolina Clerk of Superior Court Procedures Manual takes the position that the Clerk has authority to determine the reasonableness of attorneys’ fees under this scenario.