When a person dies, some of his assets – including cash – may pass to different people depending on how those assets are titled. Bank accounts are assets that can pass automatically without going through court instead of being controlled and distributed by an executor in a probate proceeding. Generally, funds in a joint bank account will pass automatically to the surviving joint owner when one joint owner dies.
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Probate v. Non-Probate
A deceased person’s estate can be divided into probate assets and non-probate assets. Probate assets are those that must pass through a probate process, often court-supervised, before they can be distributed to the beneficiary. Typically, probate assets are things that were only in the deceased’s name, including vehicles, real estate or bank accounts. Non-probate assets are distributed directly to the beneficiary without having to go through probate, and these assets are usually non-probate because they have joint owners or beneficiary designations as part of the asset, such as jointly owned real estate or payable-on-death bank accounts.
Joint Bank Accounts
Joint bank accounts – or bank accounts that have more than one person’s name as the owner of the account – usually come with rights of survivorship. This means the funds in the account automatically pass to the remaining joint owner when one joint owner dies. Frequently, spouses hold joint accounts where both names are on the account, and each spouse has full abilities to access the money in the account.
Right of Survivorship
When accounts have more than one name, the right of survivorship is presumed, meaning the account’s founding documents don’t have to specify that the surviving owner has the right of survivorship. However, presumptions can be rebutted if there was no intent for the account to include rights of survivorship. For example, if a mother adds a child to her account for her convenience so that the child can pay some of the mother’s bills, the account may not be a true joint account and may not include rights of survivorship since it seems the mother did not intend for her child to have the money in the account.
The person who wishes to challenge the presumption of rights of survivorship must present evidence to the probate court. The evidence must show that the surviving joint owner’s name was added to the account merely for the convenience of the deceased account holder. For example, this could include testimony that the mother told the banker or a friend that she wanted her child to be able to write checks for bills while she was in a nursing home.
References & Resources
- Estate Planning and Other Legal Discussions: Understanding the Differences Between Probate and Non-Probate Property
- Illinois Legal Aid: When Someone with a Joint Bank Account Dies, Does the Survivor Get All the Money?
- Baker Law Group: Hidden Risks of Joint Bank Accounts
- North Carolina Bar Association: Planning Your Estate: Property Ownership