Bank Accounts: What Happens Upon A Death?

In many cases, the bank accounts of the deceased are held up for months, in probate court. Some smart families, however, have made provisions that allow them quicker access to needed funds. Read on to find out what might happen to your bank account, after you pass away.

Accounts With Joint Ownership – If you and your spouse (or you and someone else) have a joint bank account, it does not need to be probated. Joint accounts pass automatically to the second party on the account and fall under their sole ownership.

Accounts With a Limited Power of Attorney – Some people need the convenience of adding another person to the account to help with bill paying. For example, an elderly person might designate their son as being able to write and sign checks on the account. The powers afforded to these people are very limited and expire, upon the death of the account owner.

Sole Accounts – Unless you have other designations on the account, the money in your bank account will be frozen until the end of probate, which could take several months.

Accounts with Payable-on-Death Provisions – This designation allows your beneficiaries access to funds as soon as the death certificate becomes available. You may have one or many names added, as beneficiaries to the account. When there is more than one person added, the money is evenly divided. While this does provide a seamless transfer of funds and keep the account out of probate, it may not present a complete solution to the need for cash for final expenses. Since death certificates may not be available for two or more weeks after a death, survivors may be left with no funds, for the funeral. While some people make final arrangements directly through the funeral home or leave behind insurance policies for that purpose, there is another solution. Some families create a second special account and fund it ahead of time, for final expenses. The names on this special account must not contain the name of the deceased, or the account could be subject to being frozen, depending on the laws of the state.

Speak to Your Estate Lawyer

All of the above accounts are simple to start and can be taken care of by a quick visit to your bank. The estate solutions don't stop with those above, however. There are trusts that can be set up, to encompass bank accounts and more. A trust keeps anything in it out of probate's reaches. Additionally, consider an account with a right of survivorship designation. Your estate lawyer can advise on you the best options to meet your needs. For help with any or all of the above options, work closely with an attorney, such as those at Johnson/Turner Legal.