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Joint bank accounts can be a great idea for you or a parent. A joint account can enable a relative to write checks, withdraw funds, or transfer them for your benefit. There may be an issue, however, when you pass away as to who gets the account and what happens to the account’s funds.
When you pass away, you may expect that the account’s ownership will pass to the joint owner but you may not have intended the joint owner to inherit all or any part of the joint account. If you plan to have a joint account, discuss this with an estate planning lawyer.
If you wish, you can set up a POD or payable-on-death account. This avoids the cost and delays of probate and allows whomever you designate to become the owner(s) of the funds. You merely have to advise your bank and fill out some forms. After you pass away, the beneficiary(ies) generally will only need to present a certified copy of the death certificate and an ID.
Another method is to establish a trust include the account within the trust, and name a trustee. Be sure the bank is aware of your intent, as the institution may require you to use its own forms. When you pass away, the trust funds will go to whomever you designate as its beneficiary in the trust document.
Leaving the Account to Someone Else or For Other Purposes
If you do not want the co-owner of an account to inherit the funds, then be sure that the bank does not designate it with a right-of-survivorship provision such as “John Doe and Jane Roe, Joint Tenants WROS” (with right of survivorship). Instead, have the bank remove the Co-Owner and then designate the beneficiaries you want on the account. Having an estate plan in place that clearly states your intent with regard to this account is very beneficial.
You may want the joint owner to use these funds on your behalf, such as for funeral expenses or some other purpose. Your intent will need to be clearly expressed in certain documents that your estate planning lawyer can discuss with you.
What About the Taxes and Debts?
If your account earned any interest, that interest is considered income, there will be taxes to be paid on that income. Any income that was earned before you became the sole owner will generally be included on the decedent’s final tax forms. If you and the decedent were sharing in the tax obligations, then your proportionate obligation will be on your own income tax forms. It is best to discuss all tax matters with a Certified Public Accountant when preparing your estate plan with your estate planning Attorney.
Consult Our Westport Elder Law Attorney Patricia Bloom-McDonald
There are numerous elder law issues that concern your eligibility for certain benefits, your obligation regarding taxes, and how to structure your estate to avoid unintended consequences. Patricia Bloom-McDonald has worked with thousands of clients and their families over elder law issues for over 25 years. Call her today for all of your estate planning issues.
Located in Westport, The Law Offices of Patricia Bloom-McDonald proudly serves clients across Massachusetts, including all of Bristol and Norfolk Counties, Plymouth, and the southern coast. Specific areas of service include New Bedford, Fall River, Dartmouth, Acushnet, Taunton, Dighton, Berkley, Swansea, Somerset, Seekonk, Fairhaven, Marion, Raynham, Easton, Mansfield, Attleboro, North Attleborough, Rehoboth, Lakeville, Bridgewater, Rochester, Norton, Assonet, Stoughton, Canton, Sharon, West Bridgewater, Brockton, Whitman, Maynard, Quincy, and Cape Cod. If you cannot come to us, we will come to your home, office, or a convenient location of your choosing. The initial consultation is complimentary.