Frequently Asked Questions About Bank Accounts

My mother recently died.  She had a small bank account solely in her name.  Will I need to go to court for an order appointing me as the executor in order to close the account?

That's often what the bank will tell you.  But the bank is probably wrong.  Even if the account was solely in her name, it does not mean a probate will be necessary.  That will depend on the overall value of assets which were only in her name at her death (see answers to FAQ regarding Probate.)

How can I hold title to my bank accounts so that they will avoid probate?

There are two ways to hold title to a bank account, other than in your living trust, so that no probate will be required on your death:

  1. A "joint-tenancy account"; and,
  2. An account which is payable on death to one or more named beneficiaries.

Should I add my children's names to title on my bank accounts?

Adding a child's name to an account as a joint tenant is a very common method for not only avoiding probate, but also allowing your child to access your account for your benefit. However, there are risks:

  • Your child(ren) will have present access to the account.  If you are concerned with a child's trustworthiness, you should not add that child's name to your account.
  • A bank account with your child's name on it is subject to your child's creditors.  If your child has had problems with paying his or her own bills, you should not add that child's name to title to your bank account.
  • The law presumes that when one joint tenant dies, the account belongs entirely to the surviving joint tenant.  This can result in conflict upon your death.

Isn't it easier to just name my children as the beneficiaries on my bank accounts rather than to re-title my accounts in my name as Trustee of my Living Trust?

Such a "payable on death" account is referred to as a "Totten Trust".  Most banks and brokerages (where it is called a "TOD" - transfer on death - account) will allow you to name direct beneficiaries for an account.  While it may be easier and less expensive for you to set up, please remember the following:

  • While your children can collect the account on your death, simply by presenting a certified copy of your death certificate, they will not be able to access the account for your benefit during your lifetime if you become unable to do so.  If the account is in your Living Trust, on the other hand, the Successor Trustee can access it for your benefit if you become incapacitated.
  • Generally, a Totten trust will be distributed to the named beneficiaries who are living at the time of your death.  If one of the beneficiaries you name on the account does not survive you, his or her children will not receive any part of the account.
  • With rare exceptions, an account which is payable on death will be paid to the named beneficiary regardless of the terms of your Will or Trust.
  • If you decide to change the beneficiaries, it is easier to modify a living trust than to go to each bank and add or remove the name of the beneficiary on the accounts.

If I decide not to re-title my bank account in my trust, is there a way to allow my children access to my bank account without making them co-owners?

Yes, through a Power of Attorney.  Most general powers of attorney, discussed in the FAQ regarding Powers of Attorney, authorize your attorney-in-fact to manage your bank account, either presently or when a doctor certifies that you are incapacitated.

Again, however, we frequently have problems with banks which generally refuse to honor general power of attorney; most banks require that you use the bank's form power of attorney, which is limited to accounts, and possibly safe deposit boxes, at the bank.  The banks's power of attorney card is signed by you as the principal and by the attorney-in-fact.

The banks form authorizes your attorney-in-fact to act presently, regardless of whether or not you can act.  In other words, there is apparently no such thing as a bank generated "springing" power of attorney.

Remember that the authority of an attorney-in-fact under a power of attorney ends when you die; if the account is too large and does not have payable on death beneficiaries named, probate may be necessary on your death.