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Can I Give My Child Access to My Bank Account? Should I?

McNair Dallas Law

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Would your loved ones have necessary access to your bank accounts after you die to help carry out your last wishes and handle arrangements?

Unless you’ve made plans in advance, your loved ones may have trouble accessing your bank accounts after you die. There are a number of steps you can take now to prevent this from happening. Since none of us knows when this will happen, it’s best not to delay. That’s the advice from a recent article titled 2 Ways to Give Loved Ones Access to Your Bank Accounts After You Die” from Next Avenue.

When a person passes away, bank accounts in their name only must go through probate which takes time.  One alternative is to designate a beneficiary on your bank accounts, including checking or money market accounts, CDs (Certificate of Deposits), and others through Payable on Death (POD) accounts. They are sometimes called Transfer on Death or Totten accounts.

Not only will your beneficiaries have access to the funds in these accounts as soon as they obtain a copy of the death certificate, in Texas, these accounts avoid probate.

There is a downside to Payable on Death accounts, however, and it could be a big one. If the funds in these accounts are intended for other heirs, there will be no way for other heirs to retrieve assets if the person on the account does not want to share. That’s something you need to discuss with an estate planning attorney. You may wish to limit the amount of money in your checking account, for instance, so your child can easily pay for your funeral, while keeping most other and larger assets in a trust for other beneficiaries.

Another means of accomplishing this is to create a separate bank account with co-owner status. Jointly held accounts or co-owner bank accounts also bypass probate and are fairly straightforward, especially when owned by married couples.  However, like the downside mentioned above, they can lead to unintended consequences. If the co-owner empties the account, you have no legal recourse. The same goes for creditors of the co-owner.

Using a trust avoids probate and protects your wishes for the assets.   A Living Trust allows you to control your assets while you are alive, and gives your successor Trustee access to the account, while also protecting your heirs from creditors.

If you have no will at all, and financial accounts have no POD designations or co-owners, the state’s law will be used to determine what happens to your assets, which will all go through probate. Talk with an experienced estate planning attorney to protect yourself and your loved ones.

Reference: Next Avenue (Sep. 29, 2021) 2 Ways to Give Loved Ones Access to Your Bank Accounts After You Die”

Photo by Jonathan Cooper on Unsplash

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