“You can’t take it with you,” goes the adage, but it raises the question: What happens to the bank accounts you leave behind?
The answer is dependent on a number of elements, such as whether the account is joint, whether a will exists, and whether a beneficiary has been designated.
Here are some situations to think about and what to do when an account holder passes away for individuals who were close to the dead:
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What happens if the sole owner of a bank account dies?
If someone is the sole owner of a bank account, it’s important to know whether someone is named to inherit the account’s funds.
When a person dies, the next of kin will not have access to the money in the deceased’s account.
So many people think that their next of kin is the automatic heir to their account.
But the truth is that if your next of kin is not a signatory to your account and you don’t have a written will to determine that person’s legitimacy, the person will not have access to that money at all. Your bank will have to go through a process called “legal probate.
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This probate period helps them determine who gets the money in your account. This is a very lengthy and expensive process.
Even after the whole process is done, your family will have to forfeit a very reasonable amount of the money for legal fees.
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But if you want to avoid this, simply request that your bank give you something called a POD form. POD stands for “payable on death.”
This formal, legal agreement tells your bank who they should hand your money over to after you pass away. The agreement ensures your intentions are documented and known through a Payable on Death form or beneficiary designation form that’s filled out and kept on file with the bank.
The name of the person you fill out on that POD form will determine who gets your money.
All the person needs to bring is a death certificate to get that money out.
With a POD form, you will save your family the stress of going through all that lengthy legal process and even losing some money to the law.
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Conclusion
Many banks allow their customers to name a beneficiary, which is sometimes called a payable on death or transferable on death account.
If the account holder designated someone as a beneficiary, the bank transfers the funds to the designated beneficiary upon learning of the account holder’s death. Following that, the financial institution usually closes the account.
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