Hands of man and women sign documents beside checkbook

How Bank Accounts Pass on to Beneficiaries When Your Loved One Passes

There are many things to think about when you lose a loved one, including what happens to their money. A person’s bank account may be subjected to any number of withdrawals, distributions, or changes in oversight depending on how they had their account set up and whether they chose a beneficiary or have an estate plan.

If you have questions about bank accounts and estate planning, discuss them with an estate planning attorney. A qualified legal professional can provide personalized support and guidance. 

If the Account Is Singly Owned

When an individual has a bank account solely in their name, they can designate beneficiaries. Otherwise, their remaining account balance must be disposed of by their estate.

Many banks allow account holders to designate a beneficiary in the event of their passing. When there’s a named beneficiary, the bank is obligated to release the funds to this individual once they receive proof that the account holder has died. This is usually known as “pay on death” (POD) or “transfer on death” (TOD). 

Naming a beneficiary doesn’t affect one’s finances before death, as the beneficiary doesn’t actually have access to the funds. They only come into possession of the money in the account once the account holder has passed.

When a bank account has a named beneficiary, the account doesn’t have to go through probate. Instead, the balance transfers without the need for a drawn-out legal process. 

If there’s no beneficiary, the person representing the account holder’s estate will eventually need to gain access to the funds in the account. The money will then be used to pay outstanding debts, with the remainder going to the individual’s beneficiaries as outlined in their estate plan or dictated by intestacy law.

If the Account Is Jointly Owned

Most jointly-owned bank accounts feature automatic rights of survivorship. This means that at the passing of one of the account’s signers, the other signer(s) would automatically be granted ownership of the funds. The surviving signer can continue using the account and money without interruption. 

Because funds in a joint account belong to the other signer, they aren’t considered part of the deceased signer’s estate. As such, these funds aren’t accessible by the deceased signer’s creditors and can’t be used to satisfy debts. 

The surviving signer must typically provide the bank with proof of the deceased signer’s passing. They can then either remove the deceased signer from the account or close it and open a new one.

Ensuring That Account Funds Pass on to Beneficiaries After Death

Managing bank accounts and estate planning go hand in hand. Regardless of your age or health status, it’s essential to make plans for the future of your assets when you begin the estate planning process.

Naming a beneficiary for a bank account is one of the easiest ways to guarantee that your money goes to the right person. This way, your funds will pass to your intended beneficiary without having to go through probate.

Leaving a will is also key to making sure your final wishes are respected. If you don’t have a named beneficiary or will, the court must step in and appoint a personal representative for your estate, which means your bank account funds may not be used how you would have wanted.

Rely on an Estate Planning Attorney for Help

Whether you need assistance with your estate plan or you’re a beneficiary looking to gain access to your loved one’s account, an estate planning attorney can help. 

OC Wills & Trusts serves clients through Orange County, California, and nearby areas with their bank accounts and estate planning needs. Contact us to schedule a consultation.

Brian Chew, the managing partner of OC Wills & Trust Attorneys, has extensive experience in the areas of estate planning, asset protection planning, business succession planning, long-term care planning, and veterans’ benefits. By devoting his practice to estate planning matters, he has founded a firm that strives to provide exceptional service to their clients by working closely with individuals and their families to create comprehensive and customized estate plans. For the past twenty five years, Brian has served thousands of clients in the matters of estate planning, wills and trusts. If you have any questions about this article, you can reach Brian Chew here.