Does a Joint Bank Account Have to Be in a Will?

By Cindy Hill

Bank accounts may be held jointly by spouses, siblings, parents and children, and even by individuals who are not legally related to one another but have decided to pool their finances to operate a small business or shared household. Most joint bank accounts pass immediately to the surviving owner when one owner dies, without needing to be in a will. However, mentioning your joint bank accounts in your will may have additional estate planning advantages.

Bank accounts may be held jointly by spouses, siblings, parents and children, and even by individuals who are not legally related to one another but have decided to pool their finances to operate a small business or shared household. Most joint bank accounts pass immediately to the surviving owner when one owner dies, without needing to be in a will. However, mentioning your joint bank accounts in your will may have additional estate planning advantages.

Estate Tax

Although ownership of a joint bank account passes to the surviving owner after one owner's death without having to go through probate, in most jurisdictions the contents of the joint account will still be subject to estate tax. For example, under Pennsylvania estate tax law, joint bank accounts owned by people other than spouses are subject to the estate tax, with the total balance of the account divided by the number of joint owners to determine the taxable amount, according to the Philadelphia Register of Wills. Noting the existence of a joint bank account in your will allows your executor to identify it and include it in your estate inventory more efficiently. This will save time and money, leaving more resources in your estate for distribution to your heirs.

Protect your loved ones. Start My Estate Plan

Tenants in Common

Not all joint bank accounts are set up for ownership as joint tenants with rights of survivorship. Your share of a joint bank account owned as tenants in common rather than joint tenants will not pass automatically to the other owner of the account. You must designate through your will the person to whom you would like your portion of a tenants-in-common bank account to be transferred at your death.

Common Disaster

A common disaster clause is a provision frequently included in spouses' mutual wills to set out what should happen to their assets in the event they die within a very short period of time from one another in something like an airplane crash or car accident. A bank account jointly held by you and your spouse should be included in your will along with a mutual disaster provision, so that in the event you both die within a very short period of time from one another, your executor and the probate court will have direction as to the disposition of the account contents.

Predeceased Owner

Joint bank account owners, whether or not they are spouses, may well die within a few weeks, months, or years of one another, before the joint account has been retitled after the first owner's death. For example, an adult child may die in a car accident weeks before their parent, with whom they own a joint bank account, dies of natural causes. The parent may not have had the bank re-issue the formerly joint account as a single account in the intervening stressful weeks. Including mention of a joint bank account in your will assures that, if circumstances are such that the account has passed into your ownership at the time of your death, your executor and the probate court will be aware of your intentions for the disposition of the account.

Protect your loved ones. Start My Estate Plan
Transfer on Death Vs. Beneficiary

References

Related articles

Does a Will Supersede a Pay on Death Account in California Law as to Inheritance Rights?

When people die, their assets must be collected, protected and distributed. In California, probate courts oversee the collection and safeguarding of probate assets and their ultimate distribution to beneficiaries or heirs. But not every asset the deceased owned will pass through probate. Some types of asset ownership provide for the property to directly transfer to another person upon the owner's death; these include payable-on-death bank accounts.

What Is the Difference Between a Living Trust and an Estate Account?

Living trusts and estate accounts are entirely different entities. The former is an estate-planning tool that allows a person to control assets placed in the trust during his lifetime and simplifies distribution to beneficiaries after death. The latter is an account opened by the executor of an estate after probate has been commenced to pay the estate's taxes, debts and any other necessary distributions out of estate assets.

How to Receive Stocks as Inheritance

The Internal Revenue Service has specific rules that deal with how inherited property, such as stocks, is treated. Knowing your basis in the inherited stock can help you anticipate the tax implications of selling it, which allows you to time your sales to create the lowest resulting tax burden.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

What Happens to Joint Property When Someone Dies Without a Will in Pennsylvania?

One of the advantages to holding property in joint names is that it may avoid the probate process. In Pennsylvania, ...

Can an Executor of a Will Have Access to Joint Bank Accounts Not Under His Name?

If you intend to have money in your bank account go to a beneficiary you name in your will, you may need to check with ...

What Happens When Someone Refuses to Accept Their Inheritance?

Not everyone is happy to receive an inheritance. Depending on your personal situation, you might elect to refuse or ...

Does the Executor of the Will Supersede a Joint Holder on a Bank Account?

When a person dies, some of his assets – including cash – may pass to different people depending on how ...

Browse by category
Ready to Begin? GET STARTED