Lauren A. Merritt, P.A.
Does the Money in a Bank Account Have to Pass Through Probate?
Updated: Dec 14, 2020
One of the most common assets a loved one leaves behind is a bank account- sometimes multiple bank accounts. Does the money in a bank account have to pass through probate?
In many cases, money in a bank account does not have to pass through probate. That means, the money can promptly be distributed to the lawful beneficiary after the beneficiary notifies the bank and provides the required authentication. Money in a bank account does not have to pass through probate when the account holder lists payable-on-death/pay-on-death “POD” beneficiaries (and the POD beneficiaries are still living) or if the account is held jointly with another living account holder.
Pay-on-Death (“POD”) Beneficiaries
Bank account holders have the option to list POD beneficiaries on their individual checking and savings accounts at each bank they bank with. The function of the POD beneficiary is just as it sounds- the account holder identifies and designates the beneficiary/beneficiaries he or she wishes the bank to pay the money in the bank account to after the account holder’s death.
After the account holder’s death, the named POD beneficiary should contact each bank to determine what the bank’s POD beneficiary policies and procedures are. Most banks require the POD beneficiary to produce a certified copy of the account holder’s death certificate and a form of personal identification before the bank will distribute the account holder’s money.
Listing a POD beneficiary on your bank account allows your loved ones to have access to the money in your bank account without the expense and delay of a formal probate proceeding.
Joint Bank Accounts
A bank account held jointly between two account holders passes by operation of law to the surviving account holder. For example, assume a husband and wife held a joint checking account. When the husband dies, the wife will become the sole owner of the money in the bank account. None of the money in the bank account will become part of the husband’s probate estate. The money does not have to pass through probate.
“Convenience accounts” are NOT the same as joint bank accounts. A convenience account is exactly as it sounds – an account where the account holder adds someone else’s name for purposes of convenience only, i.e., check writing, bill paying, transfers, and withdrawals. An account holder may also use a convenience account as a way to give someone authority to use the money in the account to pay estate expenses after the account holder’s death.
There is no right of survivorship for a convenience account. That means the money generally must pass through probate unless there are POD beneficiaries or unless the account was held jointly with another person, as described above.
Whether an account is a joint account or a convenience account is a very fact-specific matter. The issue is often disputed in court when there are substantial funds in the account and more than one person claims the right to the money.
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