The law in Minnesota regarding what funds in a joint bank account can be garnished when not all account holders are judgment debtors has been in flux recently. On April 22, 2010, the Minnesota Supreme Court issued an opinion, placing the burden on the account holders of proving that not all the funds in a joint account belong to the judgment debtor.

This case arose because, in 2004, First National Bank of Omaha obtained a default judgment against Mona and Lowell Bjerke for unpaid credit card bills. The Bjerkes later divorced and Mona married Robert Savig. In 2009, First National garnished the Savigs' joint checking and savings accounts at another bank. The Savigs sued the garnishing bank and the law firm that served the garnishment summons in federal court because some of the funds belonged to Robert. The federal court certified to the Minnesota Supreme Court questions requiring the application of Minnesota law on garnishments.

The Minnesota Supreme Court ruled as follows:

• A judgment creditor may serve a garnishment summons on a garnishee, attaching funds in a joint account to satisfy the debt of an account holder, even though not all of the account holders are judgment debtors.
• Account holders bear the burden of establishing net contributions to a joint account during a garnishment proceeding.
• A judgment debtor is initially, but rebuttably, presumed to own all of the funds in a joint account, and if the presumption is not rebutted, all of the funds in a joint account are subject to garnishment.

What constitutes rebutting the presumption?
Although the Minnesota Supreme Court did not address this issue, it is safe to say that the account holder will have to supply documentary evidence. Some of this would be easy, such as showing direct deposit of salary or wages belonging to one account holder or the other. The account holder could also supply copies of checks deposited showing who the payee was on each check. Proving allocation of cash deposits would be very difficult. Also, under the Minnesota Multiparty Account Act, the account holders, at the time the account is opened, could designate in writing to whom the funds belonged. It is doubtful that such written instructions would have any effect during a proceeding.

In short, this decision is very helpful to creditors trying to collect debts. For those holding joint accounts, make sure you can trust your co-owners.