Saturday, May 25, 2024

Selecting an account at a financial institution

The type of account you select may determine how property passes upon on your death. One of the most common mistakes people make is selecting a multiple party account with right of survivorship, when what they want is really a convenience account.

A common situation is for a parent to add an adult child to the bank account for the purpose of helping to pay bills. There is no intention to change the estate plan to exclude other children on the death of the account holder, but that is exactly what happens.

A multiple party account with a right of survivorship passes ownership of the account to the surviving parties on the death of one of one party. So, if only one child is added to the account the others will not take on death.

A payable on death account passes ownership to one or more named beneficiaries. No one else can make transactions on the account and the account does not pass under a will.

A convenience account allows one or more convenience signers to make transactions for a party but allows the account to pass on death under a will or by intestacy.

Many times, a parent will set up an account with right of survivorship when what they really want is a convenience account.

Estate planning is not just Wills, Trusts and Powers of Attorney. A proper estate plan requires a review of multi-party accounts and beneficiary designations to make sure that the legal consequences are in accordance with the person’s intent.

Get a copy of your account agreement from your financial institutions and discuss these with your estate planning attorney, along with your other estate planning documents.

Robert is an Elder Law, Estate Planning, and Probate Attorney at Hammerle Finley Law Firm

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CTG Staff
CTG Staff
The Cross Timbers Gazette News Department

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