When a loved one dies and you are overwhelmed with grief, financial and legal matters requiring your attention are an additional burden. At Surprenant & Beneski, P.C., our Massachusetts estate planning attorneys routinely help clients prepare for such challenging periods by making sure that assets like bank accounts will be smoothly transferred to beneficiaries when it matters most.
Access to Bank Accounts Is Critical in the Days Following a Death
Though the loss of a close family member may cloud your vision, the world goes on. There will be funeral arrangements to make and bills to pay, so having access to funds is crucial. The following are ways bank accounts can be passed on to a beneficiary. We will consider the pros and cons of each.
Beneficiary Designations
Designating a beneficiary on your bank account is a straightforward method of transferring funds to the person you name. Many bank and investment accounts allow the owner to designate a beneficiary who will inherit the funds upon their death.
The advantages of a payable-on-death (POD) account are that it avoids probate and speeds up the transfer process. It does not, however, permit complex disbursement strategies, and it may, if care is not taken, conflict with specific instructions stated in the will, in which case the will’s stated wishes may take precedence.
Joint Accounts
Joint accounts can be a simple way of transferring assets since there is no transfer at all. Once one account holder passes away, ownership reverts to the other party without taking any further action. This method also provides immediate access to funds and avoids probate. Its drawbacks may be that it puts all included resources in the hands of the other person on the account, excluding other beneficiaries. It may also make the holdings vulnerable to the other account holder’s debts.
What happens to your bank account if you don’t prepare for the transfer of funds?
Unfortunately, if you do not set up one of the above options, your bank account will be frozen and become part of your estate, meaning it will have to go through probate. This process of validation will take more or less time depending on the size and complexity of your estate.
Assuming you have a will, the bank funds will be distributed according to your wishes as stated in the will. If you die intestate (without a will), however, the bank funds will be distributed as part of your estate according to state laws of intestate succession. Either way, the probate process will see to it that your taxes and other debts will be paid before your assets are disbursed, but the process may be time-consuming and incur several legal and court fees.
Will making a durable power of attorney arrangements help?
While arranging for a trusted individual to have durable power of attorney can be invaluable if you are far from home or have become incapacitated, the power of attorney ends when you die. This means that the power you gave the individual to act on your behalf is rescinded and they no longer have access to your bank account once the bank has been notified of your death.
The Takeaway
Making your bank accounts accessible to your loved ones immediately after your death is often essential to their well-being. As you make other important provisions to facilitate their inherit-
ance, take steps to make this possible. Contact one of our experienced estate planning attorneys now. Make sure that when you pass your family will have the necessary funds to cope and give yourself the peace of mind of knowing that they will.