Lost, forgotten, stuck in probate: this is the potential fate that awaits your bank account if you don’t plan ahead. Fortunately, it’s easy to ensure your wishes are met and your wealth is protected should something unexpected happen to you.
You simply need to tell your bank how you want to name your account. Your decision will help ensure your funds are handled the way you want—instead of letting the court decide for you during the probate process.
You have several naming options—here’s a quick look at each.
Of course, we’re here to help you make the best decision for you. So let us know if you have questions or would like us to walk you through your options. It’s just one more way we’re dedicated to Banking. For You.
1. Name a designated beneficiary
With this option, the person you name has access to your account after your death without the cost and time involved with probate. That’s important, because probate can be a lengthy process where the court reviews your will (if there is one) and appoints an executor to manage your estate. The executor then has the authority to distribute your assets, including your bank accounts. If there’s no will, the court will follow state law. Most importantly, your funds are frozen and inaccessible until probate is settled.
A bank account that is solely in your name will probably go through probate, unless you plan ahead to avoid it. A quick, easy and free way to do that is by designating a payable-on-death (POD) beneficiary for your account.
2. Set up a joint account
You and one or more other individuals share and have equal access to the account. Should you die, the other joint account holder(s) have immediate access to the funds. There’s no wait or need for any other paperwork, and there’s no fee for having more than one account holder.
The instant and equal ownership of the funds can have a downside as well—for example, if the account holders are spouses and divorce or if one of the joint account owners has a judgment against them in a lawsuit. So it’s important that you open a joint account only with someone you can trust over the long term.
3. Tap into a trust account
Another potential way to avoid probate is to title your bank account in the name of a trust. When you do, your account automatically becomes an asset of that trust. After your death, the trustee will immediately take control of your account, and distributions will be governed based on the trust’s instructions.
Another advantage is that trusts are private, and you can keep your financial affairs confidential. In contrast, the probate process is a matter of public record.
To take advantage of this option, you’ll need to work with an attorney who specializes in estate planning. This will help ensure that your account is titled properly and fits within your overall wealth preservation plan.
Here are two other steps you can take with an attorney to protect your wealth:
4. Establish a financial durable power of attorney (POA)
If you’re incapacitated and can no longer make financial decisions on your own, how can you help ensure your financial wishes and best interests will be considered? One way is to grant durable power of attorney to a trusted individual who is legally empowered to act on your behalf. While this person will have access to your bank account’s funds, they are legally required to use them for your benefit.
5. Consider creating an estate plan
It’s not just for the wealthy: an estate plan can establish how all of your assets, including your bank accounts, will be managed and distributed after your death. An estate plan can be a foundation for preserving your wealth and caring for your loved ones long term.
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