Estate plans that cover big issues like investments and real estate are often at the forefront when planning an estate. Bank accounts, however, may not garner much notice. In most cases, your estate planning lawyer will ask you about your checking and savings accounts you use for day-to-day bill-paying. The funds in those accounts could be needed by your loved ones, and it's important not to assume they will be able to access them. Read on to find out more about bank accounts and making things easier for your survivors.
Frozen Bank Accounts
When a person passes away without making plans to address their bank accounts in advance, the accounts are likely to be frozen immediately. Freezing an account means no money comes or goes from the account. That includes accounts with the deceased's name on it and can apply to both checking and savings accounts held at banking institutions. During probate, the personal representative (or executor) of the estate will have the power to open a new estate account and to transfer the funds from the frozen account into it, but that usually comes several months after the death. A frozen account means that your loved ones won't have access to cash to pay for miscellaneous expenses that might occur right after the death.
Adding a Second Owner
The easiest way to avoid the frozen bank account issue is to add a second person to the account. Joint accounts don't get frozen like single ones do. It has to be another account owner, however, not just an authorized signer on the account for it to remain available to the other joint owner. As an estate move, however, you might want to consider that any funds in the account are not part of the estate but will be owned by the surviving owners of the account.
Payable-on-Death Accounts
The next easiest way to ensure access for a bank account is by placing a payable-on-death designation on the account. You can add as many names as you wish on this bank form and the contents of the account or accounts automatically pass to those named as soon as the death certificate becomes available. If there's more than one name, the contents are evenly divided. The accounts with these designations, by the way, don't have to pas through probate either.
The above bank account solutions are only the beginning of tips to make things easier for your loved ones. Speak to a probate attorney at a firm like Johnson/Turner Legal to find out more.
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