Joint and Survivor Bank Accounts; How to Make Sure you Titled your Accounts Properly
If you have a joint bank account with your parent and your parent passes away, do you inherit the account? In a recent Ohio Court of Appeals case, bad planning caused a family squabble on who inherits the bank account.
If you have a joint bank account with a child, doesn't the child inherit the account on your death?
Over 16 years ago, the Ohio Supreme Court made it clear that if a bank account has the words Joint and Survivor on it, it is conclusive that the surviving party will inherit the account, unless there is fraud or the party is under duress or incompetent when the account is set up.
However, many people don't realize that if you don't have the language with right of survivorship on the bank account, it also conclusively means that the account will not be Joint and Survivor. In a case recently decided by the Ohio Court of Appeals, the father and daughter had a joint account with no survivor language. Even though the bank testified that they interpreted that language to mean the account was Joint and Survivor, the Court held since it did not have the word survivor in the account documents. The bank account was governed by the Will and the other person on the account did not inherit the account. This means even if the father thought he had a survivorship account, it doesn't matter and the daughter was out of luck.
What should people do to make sure they don't have this happen to them?
First, you should decide whether a Joint and Survivor Account makes sense in your situation. Typically, people use Joint and Survivor Accounts to avoid Probate. A Joint and Survivor Account is an easy way to avoid Probate. However, it may not make sense for everyone. For example, if you have a Joint and Survivor Account with a child, and the child gets divorced or has a creditor problem, the account may be at risk for a claim by the ex-spouse or creditor. It makes more sense to have your account titled as Payable on Death or Transfer on Death. By naming a child as a Beneficiary of the account, they will inherit the account without going through Probate, but if they have a credit problem, it won't impact your bank account.
If you handle all of your bank accounts this way do you need a Will?
You should always have a Will in case you have an asset that you did not title properly. However, it is important to remember that the Beneficiary Designations on your bank accounts trump the Will. So if your Will says everything goes to my two children, but the bank accounts only name one child as a Beneficiary of the account, that one child gets everything and the other child is out of luck.