What Your Bank Isn’t Telling You About Your Estate Plan

I often have to unravel misinformation for my clients when it comes to Wills, estate planning, and probate. Perhaps this is most common when it comes to banks. While bankers are not attorneys, they are often put in the position of navigating the legal world of estate planning and probate. It is vital that clients are informed for when, not if, they receive confusing information from a well-meaning banker.

Here are a few keys points to know:

  1. Powers of Attorney: A power of attorney is ONLY valid while you are alive. It is incorrect to ask for a power of attorney in the event of death.
  2. Account Options: You are not always given the advice on how you want to own your accounts. Every bank has its own policies, but here a few generalities to understand:
    • “Putting someone” on your account can mean a lot of things. Did you add him or her as someone who only has access while you are alive, but no ownership interest – somewhat like an internal power of attorney? Or did you add him or her as an account owner, meaning such individual has ownership interest? Or maybe you added someone as a “POD (pay on death)” or “TOD (transfer on death)”, which would only be distributed upon death? There is no right or wrong way to set up your account – the only concern is what is your intent? A POD or TOD overrides a Will, so if you’ve named someone with the desire to assist with your estate, you actually gave such individual a gift with no obligation on how your money is used.
    • Additionally, accounts set up by one or more persons as joint tenants with rights of survivorship will pass to the surviving account holder or holders. Not all joint accounts pass to the survivor. When joint accounts are set up as tenants in common, the portion of the account that was owned by the decedent passes under his or her Will.
  3. When an Account Holder Dies: Perhaps nothing baffles banks more in my experience than when a customer dies. Whether you have a Will, living trust, or nothing at all, the information many of my clients receive is completely contradictory. Often an individual is told they can just do a sworn statement filed with the court called a “Small Estate Affidavit” to transfer an account. Without knowing A LOT more about the estate, there is no way to make such a claim. First, if there is a Will, you cannot use this document. Second, with the exception of the house and some other exempt property, the total assets cannot exceed $50,000…and any debts cannot exceed the value of the estate either. Another misunderstanding is that a Will does have to go through probate BEFORE an Executor can act or have access to any funds. I could write a great deal more about how accounts are settled upon death, but suffice it to say, reach out to an attorney BEFORE you go to the bank when a loved one dies.

There are many other issues when it comes to financial accounts that can conflict with your intent. If you’d like to review your accounts, please let me know. I’m here to navigate the murky waters of Wills, estate planning, and probate!