Probate and Joint Accounts in Bethesda

At death, assets pass four ways. Generally, they pass by beneficiary designation such as those named in conjunction with a life insurance or retirement plan. They also pass by ownership, such as joint accounts. If an account is owned by a true joint owner, then that account would pass pursuant to that titling. Assets pass pursuant to trust if they had been pre-funded into a trust. Then assets pass through probate only if they are in the decedent’s sole name at the date of the death, with no named beneficiary or joint owner.

Dealing with joint accounts and Bethesda probate can be complicated, making it essential to work with an experienced probate attorney, who can help to streamline the process and explain all misunderstandings.

Wills and Joint Accounts

A common misunderstanding when dealing with joint accounts and probate in Bethesda is that a last will and testament governs all assets of an individual, and therefore all assets of the individual are subject to the probate process. That is not quite the case, where an account is made through a joint account, meaning it is not an account that has been established for convenience only. Often, that account passes directly to the named joint owner and this can lead to a number of unattended beneficiaries.

An example is if an individual has three children who live throughout the country and they have one child that lives with them or near them in Bethesda and the parent wants the Bethesda child to assist them with banking and accounting and paying bills and writing checks as the parent loses or begins to lose mobility. That parent may choose to add that Bethesda child as a true joint owner on all of their accounts rather than as power of attorney.

If that is the case, the parent may unintentionally direct all of their assets to that Bethesda child when their last will and testament would have directed their assets to be divided three ways. Often, joint bank accounts may not be a good idea because they do result in unattended beneficiaries and they often result in a liquid estate, meaning there is not enough liquidity in the state to pay, file expenses, or to pay any taxes that may be due. Many times, joint accounts in Bethesda pass without the supervision or review of probate.

Maintaining Access to a Joint Account

In the instance where an account is established as a true joint account in Bethesda, meaning that both account owners actually have right to the assets in the account, then at death that joint account passes in most cases by operation of the law directly to the co-owner. No probate is necessary and therefore the joint account owner if they are aware of the account and aware of the death of decedent, then they can access and withdraw those funds instantly. However, this may not be a good idea in every estate. Often, accessing or using the account may eliminate any post-mortem estate tax planning that is available.

Typically, it is recommended to clients that probate attorneys review the bank account and the signature cards to determine whether an account has been established as a true joint account in Bethesda or whether it has been established for convenience only. It is not an uncommon practice to use post-mortem disclaimer planning to save or reduce tax liability. Sometimes this happens with married couples who have lots of accounts held jointly. They are eager to begin the administration process but in so doing they do not realize that they are avoiding any possibility of minimizing estate taxes at the death of the second spouse.

Contacting a Lawyer

It may be helpful to speak with a Bethesda probate attorney to see if there are any ramifications of accessing the account, if there is other administrative work that needs to be done, and whether that joint account will result in a tax liability. The deadline begins to toll on the date of death of the decedent or even earlier in that case. There are other ramifications to collecting the account and an attorney can help review the account and other assets of the estate and make recommendations as to what the best plan may be in regards to the joint account.