Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

06/14/2005
Joint checking accounts and survivorship
Is there a particular way to sign up for a joint checking account so that when one spouse dies the remaining spouse can continue to use the account as their own?
Christina Gears:
expert info »
Joint Tenants With Rights of Survivorship (JTWRS)
Connie K. Marmet:
expert info »
The answer will vary with state law but the term will be "joint tenants with right of survivorship" or something similar.
Nancy J. Nauser:
expert info »
Most checking accounts are established as a "JTWROS" (Joint Tenant With Right Of Survivorship) unless otherwise requested. Each person on the account (can be more than 2) have equal access to the account at all times without needing permission to make transactions from any of the other joint tenant(s).
Another type of checking account could be "Payable Upon Death", which means the person designated as the one to receive the account after the death of the principal would not have access to it till the principal passes away.
Gary Silverman, CFP®:
expert info »
With a Joint Tenants with Rights of Survivorship account, when one spouse dies, ownership automatically transfers to the surviving spouse. Upon the death the survivor would bring the death certificate to the bank and they would arrange the retitling of the account to the survivor's name. Usually this does not change the account number. Note that this will bypass the will, so if there is a desire for the will to control the account this method is not recommended.
Leanne Kramer:
expert info »
Joint checking accounts will do exactly as you're requesting as long as they are set up to only need the signature of only one of the account holders. You would not want an account that requires both holders to sign. Upon death you would re-register the account (or close and set up a new account) for the individual surviving spouse.
Anne Delle Donne:
expert info »
You can establish a Joint "Rights of Survivorship" or JTWROS or a Tenants by Entirety that will accomplish this transfer.
JTWROS – Property held in JTWROS is shared by several owners. Control, ownership, and enjoyment of the property are shared equally by all the joint tenants. Income from income-producing property is split equally among all joint tenants. The distinguishing feature of joint tenancy is its survivorship feature. Upon the death of each tenant, the property immediately passes to the surviving joint tenants in equal shares. This means the property is not controlled by the terms of a will and will be excluded from the probate estate.
TEN/BY/ENTY – Ownership can only be held by a husband and wife. Transfer of property or severance of ownership can only occur with the mutual consent of both parties. The distinguishing feature is that the property is protected from the claims of each spouse’s separate creditors, but not from the claims of both spouse’s joint creditors. At death the property passes automatically to the surviving spouse. Not all states permit this type of ownership, the only states that allow Ten/By/Enty accounts are AR, DE, DC, FL, HI, IL, IN*, KY, MD, MA, MI*, MN, MI, MO, NE, NH, NJ*, OK, PA, RI, TN, VT, VA, WY*.
*Not all of these jurisdictions recognize a tenancy by the entirety in personal property. The tenancy does not exist generally in personal property.
Delores Lenzy - Jones, CPA, CIA:
expert info »
Suggest setting up a Joint Survivorship Account with P.O.D. Beneficiaries - Pay-on-death beneficiaries acquire the right to withdraw only if: (1) all parties creating the account die, and (2) the beneficiary is then living. If two or more beneficiaries are named and survive the death of all persons creating the account, such beneficiaries will own this account in equal shares, without right of survivorship. The person(s) creating this account type reserve the right to: (1) change beneficiaries, (2) change account types, and (3) withdraw all or part of the deposit at any time.
Gail V. Marquet:
expert info »
When a spouse dies, the financial institution will need a copy of the death certificate to remove the deceased spouse from the joint account. The remaining spouse is then free to use the account in their name only.
This applies to accounts where spouses are joint on the account. If the account is in the deceased name only, the surviving spouse would need to provide the financial institution a copy of the death certificate and the certificate of appointment to have access to the funds. If the account is in the deceased named only, but the spouse is named as beneficiary, the surviving spouse would need to provide the financial institution a copy of the death certificate and the certificate of appointment to have access to the funds.
Elizabeth Goldsmith:
expert info »
There's not an easy answer to this question. I'd recommend that the person who needs the answer inquire at her financial institution, as it is probably handled differently at different places.
Usually if a couple opens an account, one person is considered the primary member and the other is considered the joint member. They have equal privileges, but all IRS reporting is under the Social Security number of the primary person. Let's say Joe is primary and his wife Jane is joint. If Jane dies, Joe remains the primary member and can keep the account. He can remove Jane from the account due to her death.
If Joe dies, it is a different story. Jane can continue to write checks, but will eventually have to close the account, because IRS reporting will be attached to the SS# of her dead husband, Joe. Usually such an account is left open in order to handle various expenses of the estate. Jane then opens her own account as the primary member, and arranges for all automated deposits and debits to switch to the new account. Once they do, and once all checks have cleared, the balance of Joe's account is transferred to Jane, and Joe's account is permanently closed.
Carrie Bailey Morey:
expert info »
If it's a joint account either party can use it no matter what happens. If your spouse has a individual, you need to have power of attorney and/or have check writing privileges on the account
Bret Duvall:
expert info »
Absolutely. All you need to do is open a regular joint checking account - depending on the bank you do it at.
E. Kim Dignum, CFP:
expert info »
The account should be set up as a joint account with rights of survival (WROS).
Susan Saleem:
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Different states have different rules but in general an account titled as Joint Tenancy with Rights of Survivorship lets the deceased spouse’s share pass to the surviving spouse without probate.
Barbara Babcock:
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I believe the name for this kind of account is a joint account with right of survivor (or survivorship). When you open an account, specify that you want this kind of account. The participants names will appear on the checks as "Sam or Mary Smith" instead of "Sam and Mary Smith". In the event of the death of one spouse, the survivor still has full access to funds in the account.
Laura Rogers:
expert info »
Actually, that is the nature of a joint checking account. If one account holder dies, the other account holder would have full access and rights to the account (assuming the accounts are held in your personal names versus a trust). When you open the account, the customer service representative should be able to explain the issues and your rights.

An additional note

For additional information on joint ownership of checking accounts and other assets, including the potential pitfalls, see the transcript of Suzanne Gellman’s remarks during the May 2005 Wi$e Up teleconference call on estate planning.

 

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