Managing a bank account is a common occurrence in everyday life but, seldom does anyone think about who has rights to it after an account owner dies.
The process of accessing funds from an account can easily become complex, especially when the account owner did not leave a will or otherwise make declarations with the bank and a probate court has to settle divisive matters brought by the account holder’s survivors.
Account Ownership and Beneficiaries
A primary factor that comes into play after an individual’s death is who owns and has the rights to the bank account. There are two primary types of ownership:
1) Joint Ownership – With joint ownership, two or more people are named on the account and can access funds from the account at any time. In most cases, joint bank accounts carry rights of survivorship. This means that should one co-owner die, the surviving account holder automatically becomes the sole owner of the account. The surviving co-owner may be required by the bank to present a copy of the co-owner’s death certificate.
2) Sole Ownership – Sole ownership means only one person is named on the account. The owner can name a beneficiary(ies) through a Last Will and Testament to inherit the account after the owner dies or the owner could die without a will and the laws of Intestate Succession would determine who inherits the account. The beneficiary does not have access to the account while the owner is alive. In this situation Probate Administration is almost always necessary in order to access the bank account.
3) Payable-on-Death Account – Account owners can designate a Payable-on-Death (POD) beneficiary to their bank accounts. The person designated as the POD beneficiary does not have access to the money until the death of the account holders, but would only be required to present a death certificate and proof of identity after the death of the owner.
Probate Court is Necessary in Some Cases
Joint accounts and accounts with POD beneficiaries are not considered part of a probate estate whether the decedent has a Will or dies Intestate which make probate administration unnecessary for those assets. There are often other assets that will require probate administration to be necessary, but pre-planning always makes the process easier for the heirs.
Probate administration involves providing notice to creditors. Family members need to be certain that they do not dispose of or distribute property that may rightfully belong to a creditor of the decedent.
I always strongly recommend consulting with a lawyer after the passing of a loved one to make certain that the settling of the estate is conducted in a legal manner so that the heirs do not face any legal liability for the manner the estate is resolved.