Photo by Michael Longmire on Unsplash
A joint account is a convenient way to ensure that more than one person has access to the funds of a particular account. This is particularly helpful in the event of the death of one of the account holders, where family members need funds for both unexpected and daily expenses.
If it were a bank account held solely in the deceased’s name, the funds cannot be touched or depleted except through the probate process. By having a joint account, this challenge is then avoided.
Because a joint account forms part of your assets list, it is essential to know .
How does a joint account work?
A joint account is a type of bank account that is shared by more than one person as owners and managers of the account. The named owners have full access to all money contained in a joint bank account, regardless of who opens it or who makes most or all of the deposits.
Most often, these individuals are related, such as a parent and adult child, or spouses, but they do not have to be. Friends, neighbours, and acquaintances can open a joint account if they want to.
It is important to note that each of the owner’s creditors also has legal access to the funds in a joint account. Depending on state laws, the entire account may be seized if one of the co-owners defaults on a loan or another debt.
Through an understanding of and wealth preservation strategies and solutions, you can ensure that your loved ones have access to your accounts upon your passing.
Joint bank account rules on death
What happens to a joint account when one of the owners dies?
Under the terms of most joint accounts, most banks have clauses stating that on the death of a joint bank account holder, the surviving account holder will be entitled to withdraw the entire credit balance in the joint account. Also known as a survivorship clause, this releases the bank from the liability of paying to the estate of the deceased account holder.
Complications may arise if the bank’s Terms and Conditions do not stipulate the automatic transfer of the credit balance in the joint account to the surviving account holder(s) upon the death of an account holder. In this case, the deceased’s estate will be entitled to a relevant portion of the credit balance.
Estate planning and wealth preservation strategies and solutions enable you to foresee what happens to your joint accounts in case of the unexpected.
What other actions can be done for joint accounts with no survivorship clause?
The executor of a deceased’s estate or the surviving account holder(s) may bring an action in the courts to claim the credit balance in the joint account.
In cases of dispute, the court will have to determine the intentions of the deceased in order to determine how the funds of the joint account should be distributed.
This is not an easy task as there are a lot of factors to be considered by the courts. They would have to review the behaviour and the personality of the deceased, the manner in which the deceased controlled their finances, and the relationship between the parties.
In Singapore, there have been cases wherein the courts held that joint-bank account assets would go to the estate after determining that the deceased parent opened the joint account to benefit all their children, and not just the child whose name is on the account. is then particularly important if you have a specific intent as to who should receive your joint accounts.
Estate planning and wealth preservation strategies and solutions
By going through an , this situation can be avoided. By clearly stating how you want your assets to be divided, surviving members of your family will not have to go through a legal process that could take some time and effort to resolve.
An will be able to provide valuable advice on how to make arrangements regarding your financial accounts.
Here at Kith & Kin Law Corporation, we pride ourselves with combining our up-to-date knowledge on with our corporate conviction to provide the best legal advice based on our client’s personal circumstances.