Mary, an elderly single person, had a bank account in her own name. She had a Will also, giving her entire estate to her five nieces and nephews.

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This pamphlet, published in the public interest by The ACTEC Foundation, a charitable organization formed by The American College of Trust and Estate Counsel, is about JOINT ACCOUNTS in banks (we include credit unions and S & ~s in the term "banks"), about some RISKS/PROBLEMS of JOINT ACCOUNTS, and about safer ALTERNATIVES. (If you are familiar with these risks, you may want to skip ahead to Alternatives beginning on page 7.)

A JOINT ACCOUNT is an account (checking, savings, C.D., money market, etc.) in a bank naming two or more persons as owners, such as an account payable to John Smith and Mary Smith. Many people do not realize that JOINT ACCOUNTS invite misunderstandings and disputes that can be avoided by use of other common deposit arrangements or a power of attorney. The following case illustrates the point:

Mary, an elderly single person, had a bank account in her own name. She had a Will also, giving her entire estate to her five nieces and nephews.

Some years after signing the Will, she decided that Amanda, a niece who lived in Mary's town, should be able to help her with account business and so she asked the bank to add Amanda's name to the account. The bank offered a JOINT ACCOUNT form which Mary and Amanda signed. Some time later Mary sold her residence and deposited the proceeds in the account pending


decision on another investment. Unfortunately, Mary died unexpectedly, and Amanda became the survivor and apparent owner of the entire account.

The case raises many questions. Why did Mary establish the JOINT ACCOUNT? Would she have deposited the proceeds from the property sale in the account if she had known that Amanda could claim the account balance despite the provisions in Mary's will? Is it possible that Mary only wanted a dual signature arrangement on her account to enable Amanda to help Mary with financial matters if she became disabled? Was Mary aware that ownership was involved in her simple request that Amanda's name be added to her account? Did Mary just accept the form offered by the bank without knowing about the legalities involved? Indeed, was Mary aware that the bank offered other arrangements that would have authorized Amanda to draw on the account without having ownership rights? How can these important questions be answered now that Mary is gone?

Cases like this can invite bitter feelings, litigation, and results that are not satisfactory to anyone.


Unfortunately, useful information about JOINT ACCOUNTS and other multiple-name account forms is scarce. Banking companies typically respond to customer questions about these accounts by use of computer menus or other lists of


choices, and by offering complex contract forms for customer inspection. New Accounts personnel are often warned against giving advice to customers about their account choices or responding to questions about ownership between persons named on these accounts. This probably is wise bank policy because bank personnel may lack the training and experience needed to advise customers about the complex legal relationships that accompany accounts bearing more than one person's name.

This pamphlet is designed to increase general understanding of multiple-name deposit accounts. Its goal is to equip readers with information needed to enable them to choose the type of multiple-name account best suited to their circumstances and purposes. It is hoped it will serve to reduce post-death disputes among depositors' survivors over checking, savings and CD balances in accounts bearing more than one name.


JOINT ACCOUNTS naming two or more individuals as account owners are the oldest, most familiar, and most troublesome type of multiple-name account. Each owner has full control of the account without regard to whose money was deposited in the account or whether the other owner is alive or deceased, competent or incompetent, or agrees with the purpose of a withdrawal. Ownership between those named on the account is a matter with which the bank has


llQ concern (other than as a possible witness). Indeed, ownership is important only when one person withdraws money from a JOINT ACCOUNT in excess of sums he or she deposited and the other Rerson objects.

If the JOINT ACCOUNT paperwork includes a survivorship; provision (which mayor may not be obvious from the title), the death of one owner causes that person's ownership interest to pass by survivorship to the other owner (except, perhaps, in Louisiana where survivorship among co-owners has not been recognized to date). This transfer at death occurs outside the probate process, even though the question of survivorship may require a court determination. See the text below under the heading "Questionable Survivorship". For now, simply note that each JOINT ACCOUNT owner has the power to withdraw from the account before or after the death of any other owner even if survivorship; is not Rart of the dep;osit contract. One who withdraws more than his or her ownership interest will owe the excess to the other owner or that owner's estate, but litigation may be required. A bank may decline a withdrawal request by one owner if it is asked by another owner or that owner's estate to prevent the withdrawal, but the bank is not required to do so.


The JOINT ACCOUNT is an all-purpose financial management tool that serves several objectives.


Probate Avoidance: IF survivorshiR is part of the JOINT ACCOUNT (it normally is, but not alwa~s), an owner's interest in the account balance at death passes outside probate to the surviving owners. Survivorship normally cannot be prevented by the decedent's Will because a Will controls probate assets only, and a deceased owner's interest in a JOINT ACCOUNT is not part of the decedent's probate estate when survivorship applies. Avoiding probate does n.Q.t mean avoidance of federal and state taxes on transfers of property at death, however, so this benefit only avoids any cost or delay of probate, which can be minimal.

Access on Co-owner's IncomRetence or Disabilit~: The funds in a JOINT ACCOUNT are not frozen when an owner loses the ability to handle banking matters. No durable power of attorney or guardianship is necessary to access the funds in a JOINT ACCOUNT if a co-depositor is willing and able to transact with the bank. -':

Financial PartnershiR: Happily married couples and others in comparable personal relationships often want to commingle funds because it is convenient and reflects the trust they have in each other. A JOINT ACCOUNT suits these persons because each is willing to risk any loss caused by the other's activities and wants the entire account to belong to the other in the event of death.



JOINT ACCOUNTS also involve risks that lead well-informed advisors to discourage use of this account form and recommend other alternatives that offer the same benefits with reduced risks. These alternatives are described following more elaboration about the perils of JOINT ACCOUNTS.

Risk of Loss: Either JOINT ACCOUNT owner may withdraw the entire balance and wrongfully refuse to repay the other what is rightfully due. Even if a depositor's trust in the other person is not misplaced, joint deposit paperwork routinely enables the bank or other creditors to seize the entire account balance to recover money owed by ~ owner. For exampte, Aunt Mary's money in the case described earlier could have been taken from the JOINT ACCOUNT by the bank to repay an earlier or a later bank loan to Amanda even though Mary knew nothing about the loan and was unaware of the deposit contract provision putting her money at risk. Amanda would be obligated to repay Mary the amount taken from Mary to pay Amanda's debt, but Amanda may not be good for the money. This risk may be acceptable to couples who expect to share financial rewards and risks, but may be terrifying to others.

Questionable SurvivorshiR: Some JOINT ACCOUNT forms do not mention the survivorship feature that {except in Louisiana) avoids probate when an owner dies. Examples include an account payable to "A or B", an account payable to "A and B as joint tenants", and an account payable to "A


and B". In Texas and a few other states, if no expressed mention of survivorship appears in the deposit contract, a JOINT ACCOUNT deposit creates an arrangement without survivorship commonly referred to as a "tenants in common" account. In most other states, the opposite rule applies and survivorship is a part of a JOINT ACCOUNT unless the deposit contract specifies that the depositors are "tenants in common" or otherwise expressly rejects survivorship.

If survivorship is llQ1 a part of the JOINT ACCOUNT, an owner's death is likely to precipitate a squabble between the surviving owner and the probate estate of the decedent over the size of each person's share. These disputes are difficult to resolve unless careful records of each owner's deposits and withdrawals are available.

There also is the significant risk (illustrated by our Mary and Amanda case) of survivorship rights that were unintended and attributable to depositor confusion. Thousands of court cases have litigated post-death disputes involving survivorship rights in JOINT ACCOUNTS. The theory usually urged in these cases is that the deceased person was unaware of the survivorship feature and opened the JOINT ACCOUNT solely to authorize an assistant to access the account in case of emergency or disability.


ACCOUNTS, persons should be interested in alternative account forms that offer JOINT ACCOUNT advantages but avoid JOINT ACCOUNT risks.

JOINT ACCOUNTS serve to (1) assure access to funds in spite of a depositor's loss of capacity; (2) transfer the account balance at death via the survivorship right avoiding probate; and (3) permit full commingling of funds by persons in close relationships who trust each other. Years ago, persons who wanted only some of these features had to choose between all or none because the JOINT ACCOUNT was the only multiple-name account offered.

The good news is that most banking institutions now offer alternatives to the JOINT ACCOUNT that meet the needs of most persons interested in less than all features of a conventional JOINT ACCOUNT. One is an account describing the depositor's selection of a beneficiary who is entitled Qll1y to balances in the account at the depositor's death. The other is a single owner account that designates a second person to be recognized by the bank as the depositor's agent having authority to withdraw for the depositor who is not intended to have a personal beneficial interest in account balances immediately or at the depositor's death.


Two account forms enable a depositor to retain sole ownership and control of an account that designates another to receive the account by a nonprobate transfer at the


depositor's death. One is known as a "pay on death" (p.o.d.) account. The other, called a trust account or "Totten" trust, takes the form of an account in the name of the depositor who is described as "trustee" for, or as holding "in trust for", the person named as beneficiary. For example, a p.o.d. account title would appear as "John a. Owens, p.o.d. Nancy Owens". A trust account title would appear as "John a. Owens, trustee for Nancy Owens".

Both forms create what we call a DEATH BENEFICIARY ONLY ACCOUNT, having the following characteristics:

.the owner [John a. Owens] has sole ownership and control of the account;

.Nancy Owens [whether named as "p.o.d. Nancy Owens" or as beneficiary in a trust account] becomes the new owner of the account upon surviving the owner [John];

.Nancy usually will not have to sign the bank form establishing the account, and mayor may not be aware of the account;

.the owner [John] can close the account by withdrawing all money from it, and the beneficiary's consent [Nancy's] is not needed; .the bank should not be counted uRon to notify a

beneficiary of this death benefit, meaning that the owner should tell the beneficiary about the arrangement, or leave information about it in a writing to be read after death such as a Will, so as to enable the beneficiary to apply to the bank for the proceeds.


A DEATH BENEFICIARY ONLY ACCOUNT serves like a Will to give the death beneficiary whatever is in the account at the death of the owner but differs from a Will in that it need not be probated. Also, though Will-like in function, it generally cannot be revoked by a later Will and can be nullified only by closing the account or by signing another [new] account agreement.

Note, too, that in most states, divorce alone revokes a Will's gifts to the former spouse by operation of law, meaning automatically and whether or not that result is intended by the persons involved. This revocation by divorce rule generally does nQ1 serve to revoke a former spouse's right as death beneficiary of a DEATH BENEFICIARY ONLY account, but some court decisions recognize that the trust account form (but not the p.o.d. form) may be affected by the Will, and a few recent statutes recognize explicit language in a Will as effective to alter any account death benefit.

Despite these possible uncertainties, a DEATH BENEFICIARY ONLY ACCOUNT is preferred to a JOINT ACCOUNT as a method of transferring money at death without probate. Unlike the JOINT ACCOUNT, the DEATH BENEFICIARY ONLY ACCOUNT can serve no other purpose but to make a transfer at death; there can be no confusion about the owner's purpose as was suggested in our Aunt Mary-Amanda case described earlier. A claim against a DEATH BENEFICIARY ONLY ACCOUNT by heirs of the deceased owner should fail unless the deceased


lacked capacity to understand the deposit transaction or was wrongfull~ misled or coerced in selecting the death benefit form.

A death beneficiary designation can be added to a joint account with survivorship. For example, a married couple might want a joint and survivor account and also want to provide that at the death of the survivor of the couple the account should go to their children. As in the example of John and Nancy Owens, the account could be set up in this fashion:

payable to John a. Owens and Nancy Owens, and the survivor of them, and upon the death of the survivor, p.o.d. their children, Mary Owens and Mickey Owens, surviving them in equal shares [or in whatever proportion John and Nancy prefer].

The wording may change with particular banks, and even may be in the form of a trust;k, payable to John a. Owens and Nancy Owens, and the survivor, in trust for Mary Owens and Mickey Owens. Either way, the death beneficiary takes nothing until both John and Nancy die without expending or changing the account. (The survivor of the two original owners is the sole owner following the first death and is free to change the death benefit.)



Some persons may want a single or joint owner account with access by another person who is not an owner but is authorized to act as the owner's agent or assistant. This type of account offers the convenience of dual access but avoids the risk of loss to creditors of the assistant gn.g avoids any survivorship benefit for the assistant.

One form serving this purpose is a single or multiple-person account that designates an "additional authorized signatory" who may sign withdrawals on behalf of the owner-depositor. Another form serving the same purpose describes the assistant as the owner's "agent", or as authorized by the owner's "power of attorney". Some banks refer to accounts in either of these forms as "Convenience Accounts". We refer to all of these forms as AGENCY ACCOUNTS.

On occasion a bank may insist on receiving an accompanying "durable power of attorney" document incident to opening an AGENCY ACCOUNT. More commonly, power of attorney language will be included in account paperwork signed when the account is opened or simply implied from describing the assistant as an agent or otherwise authorized to act on behalf of the account owner.

Authority to access an owner's account as the owner's agent or additional authorized signatory ends when the bank receives written notice of revocation of the agency, or of the depositor's death.


Don't count on the bank to enforce an account agent's responsibility to the owner. Banks accept these arrangements only because they are protected by the account contract in recognizing the agent's withdrawal power as unconditional.

Most banks will recognize that the same person may be designated as the depositor's agent .gmt as a death beneficiary. For example, an account might be entitled:

payable to Randolph Jones. Additional authorized signatory: Randolph Jones, II; p.o.d. Richard and Randolph Jones, II.

This form offers the advantage of dual access by one son without risk of loss to the son's creditors during the father's life, and a nonprobate transfer at the father's death to two sons, there being no need to favor the one who was his father's agent to handle account business.


A model state statute designed for enactment by all states encourages banking institutions to offer depositors a menu of available multiple-name accounts. This menu is reprinted as a further illustration of the text. As a step towards informing depositors of their account options, you may wish to urge your bank to adopt this national form.



PARTIES [Name One or More Parties]:

OWNERSHIP [Select One and Initial]:



Parties own the account in proportion to net contributions unless there is clear and convincing evidence of a different intent.

RIGHTS AT DEATH [Select One and Initial]:


At death of party, ownership passes as part of party's estate.


[Name One or More Beneficiaries]:

At death of party, ownership passes to POD beneficiaries and is not part of party's estate.



At death of party, ownership passes to surviving parties.




At death of last surviving party, ownership passes to POD beneficiaries and is not part of last surviving party's estate.


At death of party, deceased party's ownership passes as part of deceased party's estate.


Agents may make account transactions for parties but have no ownership or rights at death unless named as POD beneficiaries.

[To Add Agency Designation To Account, Name One or More Agents]:

[Select One and Initial]:




It is hoped that this pamphlet will help you ask the right questions when you consider a multiple-name account, or wish to discuss the topic with your advisors. Keep it handy with your account information for future reference, or pass it along to others with a need to know this important information.





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