A joint bank account is an account that two or more people share. The key feature of joint accounts is that each person named on the account has the ability to access and manage the funds independently. There are several types of joint accounts, including:
- Joint Tenants with Rights of Survivorship (JTWROS): This is the most common type of joint account. It means that if one account owner dies, the surviving account owner automatically becomes the sole owner of the account, without needing to go through probate.
- Tenants in Common: In this type of account, each owner has a designated share of the account. If one person dies, their share of the account does not pass automatically to the surviving co-owner. Instead, it becomes part of the deceased person’s estate and is subject to probate.
- Payable on Death (POD) Accounts: Though not technically a joint account, a POD account allows a co-owner or another designated beneficiary to inherit the account funds upon the account owner’s death. This is another form of automatic transfer, but it involves naming a beneficiary rather than having rights of survivorship.
Things to Check with Your Bank When Someone Dies
Losing a loved one is always difficult, and dealing with the financial and legal aspects of their estate can be overwhelming. If someone you know has passed away and they held a joint account, here are key steps you should take:
1. Obtain a Death Certificate
Most banks will require an official death certificate as proof of the individual’s death. The death certificate is crucial in changing the account owner’s status and allowing access to funds.
2. Contact the Bank
Notify the bank of the individual’s death as soon as possible. This will help prevent unauthorized transactions and allow the bank to provide you with the necessary steps to proceed with account access or transfer. The bank may place a hold on the account until the necessary documentation is reviewed.
3. Review Account Terms
Each bank has its own policies regarding the passing of an account owner. It’s important to clarify the specific terms of the joint account, such as whether the surviving account owner will retain full access to the funds or if probate is required. Ask if there are any immediate restrictions on the account.
4. Update the Account Ownership
If the account is held jointly with rights of survivorship, you may need to update the account to reflect that the deceased account owner is no longer a part of it. The surviving account owner may need to provide the death certificate and any other required documents to the bank to finalize this update.
5. Check for Outstanding Bills or Payments
If the deceased person was the primary person responsible for any bills or automatic payments linked to the account, be sure to check for pending transactions. It may be necessary to redirect payments to the surviving account owner or cancel any future payments.
6. Verify Beneficiaries
If there is a payable-on-death (POD) beneficiary listed on the account, they should be notified about the account’s status and the necessary documentation they will need to claim the funds. The beneficiary may be required to provide proof of their relationship to the deceased and any other relevant documents.
7. Understand Tax Implications
In some cases, transferring funds from a deceased person’s account may have tax implications, especially if the account balance is substantial. It’s a good idea to consult with a financial advisor or estate attorney to understand any tax liabilities that might arise from inheriting the account.
Joint bank accounts can be a helpful tool for managing shared finances, but it’s important to understand how they operate in the event of death. Be sure to speak with your bank so that you know what the process will look like in the event one of the owners passes. By understanding the process and the necessary steps, you can avoid confusion and ensure that financial matters are handled with care during an already difficult time.
