Unauthorized Withdrawal From a Joint Bank Account in New York

An unauthorized withdrawal from a joint bank account in New York is harder to reverse than most people expect. Under New York Banking Law Section 675, either holder of a joint account is a full legal owner of the funds and can withdraw the entire balance without the other’s consent.1New York State Senate. New York Banking Law BNK 675 – Joint Deposits and Shares; Ownership and Payment The bank will almost never claw the money back for you. But if the withdrawal violated an agreement about how the account was to be used, involved deception, drained funds in bad faith, or happened after a divorce action was filed, you have real civil claims — and sometimes criminal ones — to recover the money.

Why the Bank Probably Won’t Help

Section 675 treats a deposit made in the names of two people, payable to either or the survivor, as the property of both as joint tenants.1New York State Senate. New York Banking Law BNK 675 – Joint Deposits and Shares; Ownership and Payment Either person can withdraw any amount at any time. Unless the account agreement includes a two-signature requirement or another specific restriction, the bank will process a withdrawal from either party without asking questions.2Consumer Financial Protection Bureau. A Joint Checking Account Owner Took All the Money Out and Then Closed the Account Without My Agreement. Can They Do That?

That’s the starting point of any dispute. A withdrawal by your co-owner isn’t wrongful just because you didn’t know about it or didn’t agree to it. The legal question is whether the withdrawal was made in good faith for a purpose consistent with the account’s intended use — and that fight happens in court, not at the bank counter.

When a Co-Owner’s Withdrawal Is Legally Wrongful

Courts look at several factors when deciding whether a joint account withdrawal crossed the line.

The clearest case is one that violates an explicit agreement between the holders. If two business partners opened a joint account to cover operating expenses and one partner drains it for a personal vacation, that partner has taken funds outside the scope of the agreement. The same logic applies to a child added to a parent’s account solely to help pay bills — a large personal withdrawal by the child goes beyond what the account was meant to allow.

Even without a written agreement, timing and context matter. A withdrawal made the day before a divorce filing, right after a business dispute, or immediately following a family argument raises red flags courts take seriously. Concealment weighs heavily too: if the person who took the money lied about where it went or tried to hide the transaction, that cuts strongly against them.

Middle cases are harder. One spouse withdrawing money to cover household expenses during a separation is much harder to challenge than a spouse transferring the entire balance into a personal account the other can’t touch. Outcomes often turn on who can better document the account’s purpose and each party’s contributions to it.

Steps to Take Right Now

If you’ve just discovered a large withdrawal you didn’t authorize, act quickly. The longer the money sits somewhere else, the harder recovery becomes.

  • Call the bank the same day. Ask whether restrictions can be placed on the account, such as requiring both signatures for future withdrawals. Banks aren’t required to do this on a standard joint account, but some will accommodate the request, especially if you flag potential fraud.
  • Open an individual account in your name only. If direct deposits or automatic payments are still routing through the joint account, redirect them so future deposits are safe.
  • Pull complete transaction records showing the balance before and after the disputed withdrawal. Save every text, email, or message where your co-owner discussed the account or the withdrawal.
  • If there’s a real risk of further withdrawals, a New York court can issue a temporary restraining order freezing the account. This generally means filing a motion in Supreme Court and showing that irreparable harm will result without the freeze.

Withdrawing your own share preemptively, before the other person takes more, can backfire. If you later need to argue that your co-owner acted in bad faith, courts will look at your own conduct too. Talk to an attorney before making that move if litigation seems likely.

Civil Claims to Recover the Money

Three civil theories are the workhorses of joint account disputes in New York. Plaintiffs often plead all three and let the court decide which fits best.

Conversion

Conversion is the standard claim when someone exercises wrongful control over your property. You’d need to show that your co-owner took funds they had no right to, either because the withdrawal exceeded their ownership share or violated the account’s intended purpose. Damages equal the amount wrongfully taken plus interest, which accrues at 9% per year under New York law.3New York State Senate. New York Civil Practice Law and Rules CPLR 5004 – Rate of Interest The statute of limitations is three years from the date of the wrongful withdrawal.

Breach of Fiduciary Duty

When the co-owners share a relationship carrying a duty of trust — spouses, business partners, a child managing a parent’s finances — the withdrawal may have breached a fiduciary obligation. This claim is powerful because it opens the door to equitable remedies beyond dollar-for-dollar repayment, such as a court-ordered accounting of every transaction on the account. The limitations period is three years for pure money damages, six years for equitable relief like an accounting or a constructive trust.

Unjust Enrichment

Even without a formal agreement or fiduciary relationship, you may have a claim if your co-owner benefited unfairly at your expense. Unjust enrichment doesn’t require proving intent — just that one party ended up with money that equitably belongs to the other. Courts can order full restitution. The limitations period is six years.

Small Claims Court for Amounts Under $10,000

If the disputed amount is $10,000 or less, New York’s small claims courts offer a faster and cheaper path.4NYCourts.gov. Small Claims Court – In General You don’t need an attorney. You file a statement of claim, pay a modest filing fee, and present your case to a judge or arbitrator, typically within a few weeks.

Small claims works well for straightforward disputes with clear documentation: bank statements showing the withdrawal, messages from your co-owner, or a written agreement about how the account was supposed to be used. For amounts above $10,000, or cases involving complex fiduciary relationships, you’ll need to file in a higher court.

When It Becomes a Crime

Most joint account disputes stay in civil court. But certain withdrawals cross into criminal territory, and the deciding factor is intent — specifically, whether the person who took the money intended to permanently deprive the other holder through deception or other unlawful means.

Larceny

New York Penal Law Section 155.05 defines larceny as wrongfully taking, obtaining, or withholding another’s property with intent to deprive them of it.5New York State Senate. New York Penal Law PEN 155.05 – Larceny; Defined In a joint account context, this usually involves larceny by false pretenses, such as telling the other holder a withdrawal was for a shared expense when it was actually for personal use. The severity depends on the amount taken:

  • Petit larceny, $1,000 or less: Class A misdemeanor, up to one year in jail.
  • Grand larceny in the fourth degree, more than $1,000: Class E felony.6New York State Senate. New York Penal Law PEN 155.30 – Grand Larceny in the Fourth Degree
  • Grand larceny in the third degree, more than $3,000: Class D felony.
  • Grand larceny in the second degree, more than $50,000: Class C felony.
  • Grand larceny in the first degree, more than $1,000,000: Class B felony.

Prosecutors are often reluctant to pursue these charges in joint account cases because the co-owner’s legal right of access complicates the “wrongful taking” element. Cases that get prosecuted usually involve clear deception, a vulnerable victim, or a very large sum.

Scheme to Defraud

If the withdrawal was part of a broader pattern of deception, Penal Law Section 190.65 may apply. Scheme to defraud in the first degree requires a systematic, ongoing course of conduct with intent to defraud multiple people, and obtaining property exceeding $1,000 by false pretenses.7New York State Senate. New York Penal Law PEN 190.65 – Scheme to Defraud in the First Degree This charge fits ongoing fraudulent conduct more than a single disputed withdrawal.

Elder Financial Exploitation

Withdrawals targeting elderly or incapacitated joint holders receive heightened scrutiny. Adult Protective Services and local prosecutors have dedicated units for these cases, and courts tend to treat them more aggressively than routine account disputes.

Reporting the Transaction to the Bank

Banks rarely reverse a withdrawal just because the other holder objects. Where they do get involved is with electronic transactions and forgery.

Electronic Transactions and Regulation E

If the withdrawal was electronic — an ATM withdrawal, debit card purchase, or online transfer — federal Regulation E gives you specific protections and tight deadlines. You must notify the bank within 60 days of the statement showing the disputed transaction.8eCFR. 12 CFR Part 1005 – Electronic Fund Transfers (Regulation E) Your potential liability depends on how fast you report:

There’s a serious catch for joint accounts. Regulation E was designed for truly unauthorized access, like a stolen debit card. When the person who made the transfer is a legitimate co-owner, banks often decline to treat it as “unauthorized” under the regulation, and push you toward civil court instead.

Forged Checks

If your co-owner forged your signature on a check or altered a check amount, different rules apply. Under UCC 4-406, you have one year from the date the bank makes the statement available to report an unauthorized signature or alteration on a check.10Cornell Law School Legal Information Institute. UCC 4-406 – Customer’s Duty to Discover and Report Unauthorized Signature or Alteration Miss that deadline and you lose the right to make the bank reimburse you, regardless of any carelessness on the bank’s part.

What the Bank Will Actually Do

On an electronic dispute, the bank may issue a temporary credit while it investigates. For in-person withdrawals or check transactions, you likely won’t get provisional credit. Banks refer forgery and identity theft to law enforcement, but they almost never step into what they view as a private disagreement between two people who both signed the account agreement.

If You’re Getting Divorced, the Rules Change

Divorce dramatically alters what a joint account holder can do. Under New York Domestic Relations Law Section 236, automatic restraining orders take effect the moment a divorce action is filed. These orders prohibit both spouses from selling, transferring, concealing, or disposing of any property — including cash in bank accounts — except for ordinary household expenses, usual business transactions, or reasonable attorney’s fees.11New York State Senate. New York Domestic Relations Law DOM 236 – Special Controlling Provisions

The orders bind the plaintiff immediately upon filing and bind the defendant upon service. Violating them can result in contempt of court, sanctions, and an unfavorable inference when the judge divides marital property. If your spouse drains a joint account after a divorce action has been filed, you have a much stronger case than in an ordinary joint account dispute — the automatic orders give you a clear, enforceable prohibition to point to.

Even before formal filing, a spouse who suspects the other will empty joint accounts can petition for a preliminary injunction freezing the assets. Judges grant these routinely when there’s credible evidence of dissipation.

If the Account Holds Federal Benefits

Social Security, SSI, and veterans’ benefit deposits carry special rules that matter when a joint holder withdraws them.

Federal law requires banks to protect two months’ worth of federal benefit deposits from garnishment by creditors.12Consumer Financial Protection Bureau. Your Benefits Are Protected From Garnishment That protection applies inside a joint account, but it’s tied to the benefit recipient, not the co-owner.

When a benefit recipient dies, the rules tighten fast. The federal government can reclaim any benefit payments deposited after the recipient’s death, and the bank is liable for returning those funds. Under Treasury regulations, agencies can initiate reclamation within 120 days of learning about the death and can reach back up to six years for post-death payments still sitting in the account.13eCFR. 31 CFR Part 210, Subpart B – Reclamation of Benefit Payments If a surviving co-owner already withdrew those post-death deposits, the bank may still be required to return the money to the government, then pursue the co-owner to recover it.

For SSI recipients specifically, the Social Security Administration presumes that all funds in a jointly held account belong to the SSI recipient, which affects eligibility if the balance exceeds resource limits.14Social Security Administration. 20 CFR 416.1208 – How Funds Held in Financial Institution Accounts Are Counted

A Tax Trap Worth Knowing About

One thing to be aware of even when the withdrawal was against your will: the IRS may still treat the transferred funds as a gift unless you can show otherwise. If you deposited all the funds and your co-owner withdrew money for their own benefit, the IRS ordinarily treats that withdrawal as a completed gift from you to the co-owner.15Internal Revenue Service. Instructions for Form 709 Simply adding someone’s name to your account isn’t the taxable event; the withdrawal is.

In 2026 the annual gift tax exclusion is $19,000 per recipient.16Internal Revenue Service. What’s New – Estate and Gift Tax If a co-owner withdrew more than $19,000 of your money in a single year for their own use, Form 709 is generally required. Most people won’t owe tax because of the large lifetime exemption, but failure to file carries penalties of 5% of any tax due per month, up to 25%.17Internal Revenue Service. Failure to File Penalty Documenting the dispute, any demand for return of the funds, and any legal action you take helps establish that no gift was intended.