Estate Planning: Titling bank accounts

A: I think the best way to title a bank account is the way that best serves your goals and estate plan. Since everyone’s goals and estate planning needs are different, there isn’t one way to title the account that works for everyone.

There are obviously numerous ways to title a bank account. You could hold title to the account solely or as a joint owner with a loved one. If you have a trust or a business, the account should be held in the name of the trust or business. In addition, you can designate payable on death (POD) beneficiaries on the account. In that case, the account could be titled John Doe, POD to Jane Doe.

There are a lot of options.

As important as it is to know how the account is titled, it’s equally important to understand the consequences of titling it in that way.

For example, if the account is strictly in your name without any beneficiaries, the account is a probate asset and will be transferred pursuant to your estate plan. If, on the other hand, the account is in joint names, the survivor of you will likely own the account after the first death, regardless as to what the deceased joint owner’s estate plan says.

In addition to ownership and how it will impact your estate plan, it’s important to know who can sign on the account. Remember, it is possible to have authorized signors on an account without granting them an actual ownership interest in the account. This can be important if you were to become incapacitated. It’s also really important when the account is in the name of an entity such as a business. If the account is in the name of a business and the business owner signatory dies, it may not be clear who, if anyone, can sign on the account to keep the business running. This may sound obvious but it happens all the time when the decedent owns a small business.

There are a lot of options when it comes to bank accounts but no “one size fits all” answer. The important thing to know is how the account is titled and the consequences of owning it that way. You should also make sure that if fits into your estate plan to so that there are no unexpected results.