Understanding Joint Bank Accounts Following a Family Member's Passing
by Priscilla Wick
The Impact of Survivorship Rights
In most instances, joint bank accounts are established with 'rights of survivorship.' This legal designation ensures that if one account holder passes away, the remaining funds automatically become the property of the surviving partner. Because this transfer happens by operation of law, the money typically bypasses the probate process, allowing the survivor to maintain uninterrupted access to the capital for funeral costs or daily living expenses.
Accounts Without Survivorship Provisions
Not every shared account includes survivorship rights. In cases of 'tenancy in common,' the deceased individual's portion of the funds is considered part of their estate. Consequently, those specific assets must go through probate court and will be distributed according to the decedent's will or state inheritance laws, rather than going directly to the co-owner.
Even when ownership transfers automatically, the surviving account holder must take formal action. Financial institutions like Chase, Bank of America, or Wells Fargo require an official death certificate to update their records. Once notified, the bank will typically remove the deceased person's name from the account or transition the funds into a new individual account for the survivor.
Tax and Debt Considerations
It is important to recognize that while the survivor may own the funds, there could be tax implications depending on state regulations. Additionally, if the deceased had significant liabilities, creditors might occasionally attempt to lay claim to assets that were held jointly, though survivorship laws generally protect these funds from the estate's individual debts.
