Joint bank accounts, such as checking, savings, CD or Money Market seem to be relatively straightforward. However, the disposition of your assets in your account when you become ill or die often becomes problematic.
When you open a bank account, usually the account services person will inquire if you want the account to be jointly held. Unfortunately, this person probably does not provide sufficient information to you to make an informed and intelligent decision. Adding a joint name to the account, which is usually entitled “depositor” or “co-depositor,” basically means that the funds in the account are available to be withdrawn by either you or the survivor.
If you die, the co-depositor, as a joint owner, will have your funds accessible without the need to pass them through your Will or the probate process. These funds may not have been intended to pass to that surviving joint owner, but rather, merely to be available to that joint owner in the unfortunate event that you became incapacitated. Your intention may be simply to alleviate the need for the joint depositor to proceed to the court for a guardianship to have access to your funds to pay your bills.
Depending on your intention, there are several options to alleviate this potentially problematic situation.
- Include language in your Will that specifies that the account is joint for convenience only and is not intended to pass to the surviving joint owner.
- Open the account in your name alone and establish a Durable Power of Attorney that will allow another person to attend to deposits and withdrawals in the event of your incapacitation.
- Make the account “POD,” which stands for payable on death. In this situation, you have complete control of the account during your lifetime while competent. In the event of incapacity, the fund or the account may be attended to by the person you designated in your Durable Power of Attorney. Upon your death, the account is payable to a surviving beneficiary without the need for probate. If you want, the POD beneficiary could be your Trust, which will allow of the assets in your bank accounts to flow relatively easily, without probate and without any significant expense, into your Trust, to be administered in accordance with the terms its provisions
As demonstrated above, while adding a joint name appears to be a relatively straight-forward situation, there can be significant adverse consequences when upon your death. If your joint owner believes the funds are theirs, and your Will has a contrary disposition of your assets, then your family and/or other owners will certainly be embroiled in litigation to determine the rightful owners of your deposits when you died. This may all be avoided with careful attention to names on accounts upon their opening.
By: Hyman G. Darling, Esquire
Comments