When a person dies, there is usually a bank account in their name which contains money. For the surviving family members, there is a question of what will and should happen to the decedent’s funds. What happens to these funds upon the account owner’s death will depend on the decisions the account owner made before their death and what designations are on the account.
If the person had someone else of their bank account as a joint account holder, any money remaining in the account would become the property of the other account holder if the account had under survivorship. In this context, survivorship means that if you share an account with someone and that person survives you, the account belongs to them as a survivor. While many people have joint accounts with their spouse, the joint account holder does not have to be a spouse to automatically be the recipient of the funds in the account.
A person with a bank account can also set up the account with a feature which directs payment of the account to another person upon their death. The terms commonly associated with this feature is “transfer on death” or “payable on death.” This is another means to get your bank account funds to a designated beneficiary without their having to go through a probate process.
Some people plan for a trust to begin upon their death and will designate their bank account to become part of the trust. If that occurs, the account will become part of the trust and be administered according to its terms.
Without survivorship with a joint account holder, a payable upon death feature, or trust, the bank will hold the money pending the outcome of probate proceedings. This can mean that the funds are tied up for months while the court probates the estate. For those seeking to avoid probate, estate planning which includes a transfer on death provision or trust would be better than allowing the account to go through probate. Very rarely is it in your best interest to add a non-spouse joint account holder to your bank account or other financial accounts. If you are adding someone’s name to your bank account, you should make sure you understand what problems it may cause. Our office has experienced attorneys who can help you examine all of these options and determine which the best is for you. Please contact us online or by phone if we may be of assistance.