Have you ever thought about what happens to your bank account when you die? If you are the sole account owner and don’t have a Will, there’s going to be a problem.
Sole Account Owner - Access Denied
“A bank account in an individual’s name alone will require a court order to access it,” explains Gentreo.com Founder and Chief Legal Officer Mary Kate D’Souza.
Since your loved ones would not be able to access the account, someone would need to be appointed by the court to serve as an administrator of your estate. The administrator would then be authorized to distribute the bank account funds in accordance with your state’s intestacy law – a statute that allows the court to take over an estate whose owner died without a Will in order to disperse its assets.
Joint Account - Right of Survivorship
In the case of a joint account – where two people are equal owners – and one person dies, the ownership transfers to the survivor allowing full access under the “right of survivorship.” Check to see if your account has right of survivorship included.
“A joint bank account with right of survivorship can automatically be accessed by the surviving joint tenant,” Mary Kate said.
Why You Need a Will
In a Will, you provide instructions as to how the assets are to be distributed and name the beneficiaries that are to receive them after you pass. Having a Will in place ensures your bank account can be accessed by the person of your choice.
“Usually, if there is a Will, there is a chosen loved one nominated to serve as Personal Representative of the decedent’s estate,” said Mary Kate. “Once the Personal Representative, also known as an executor, is appointed, they can access the account to pay bills and distribute it according to the terms of the Will.”
“As you can see, the easiest way for a loved one to access the account is to be a joint tenant with the right of survivorship,” Mary Kate explains. “The next best option is to have a Will, which will not only control the bank account but all other assets. The worst case is when the bank account has a single owner who doesn’t have a Will because it makes work for your survivors and you lose control over how you want your funds distributed.”
Why You Need a Power of Attorney
Having a Power of Attorney is equally important as having a Will, especially if you are the sole account holder.
While a Will goes into effect upon your death, the Power of Attorney is in effect while you are alive. If you should become seriously ill or injured and cannot make your own decisions, the person you appointed as your Power of Attorney can control and manage your finances.
“Similar to what would happen in the absence of a Will, the absence of a Power of Attorney means that if you are alive but incapacitated and your name is the only one on the account, your loved ones would need to go to court to be appointed as your conservator to access and manage your bank account,” said Mary Kate.
How Estate Planning Can Help
An estate plan is essential to protect your assets and loved ones while putting you in control of ensuring your choices and wishes are carried out if something happens to you.
“Good financial and estate planning is analogous to the health adage ‘an ounce of prevention is worth a pound of cure,’” explains Mary Kate. “A simple estate plan is easy and affordable with an online solution like Gentreo.com. By creating estate planning documents, including a Health Care Proxy, Power of Attorney, and Will, you will save yourself and your loved ones thousands of dollars in unnecessary court and legal costs.”
Mary Kate points out that in her 20 years’ experience in estate planning, elder law, and probate litigation, she has “seen first-hand the emotional and financial devastation wrought by families that fail to plan.”
“Especially now in the time of the pandemic, it’s important that all capable adult Americans have their essential estate planning documents,” she said.
Gentreo.com is an online estate planning software solution that offers a Digital Family Vault and Team sharing feature, so that you can not only create but also store and share your important documents and information at an affordable price, anytime, anywhere. Gentreo.com was featured in a U.S. News and World Report article about the Best Online Will Making Programs.