Will Banks Release Money Without Probate?
The short answer is usually no.
If you own an account in your own name, and don’t designate a payable-on-death beneficiary then the account will probably have to go through probate before the money can be transferred to the people who inherit it. If, however, the total value of your probate assets is small enough to qualify as a small estate under your state’s law, then the people who inherit from you will have simpler, less expensive options. Depending on your state’s law, they may be able to use a simplified probate procedure or simply prepare an affidavit (sworn statement) stating that they are entitled to the money, and present that to the bank. Not all states offer both options.
Accounts With a Payable-on-Death Beneficiary
Probably the simplest way to leave a bank account to someone is to name that person (or more than one) as the “payable-on-death” or POD beneficiary. You can do it by filling out and submitting a form that the bank supplies. The money is not part of your probate estate (assets that can’t be transferred without the probate court’s approval), so it can be quickly and easily transferred to POD beneficiary. After your death (and not before), the beneficiary can claim the money by going to the bank with a death certificate and identification. Your beneficiary designation form will be on file at the bank, so the bank will know that it has legal authority to hand over the funds.
Jointly Owned Accounts
If you own an account jointly with someone else, then after one of you dies, in most cases the surviving co-owner will automatically become the account’s sole owner. The account will not need to go through probate before it can be transferred to the survivor.
Accounts With the Right of Survivorship
Most bank accounts that are held in the names of two people carry with them what’s called the “right of survivorship.” This means that after one co-owner dies, the surviving owner automatically becomes the sole owner of all the funds. Sometimes it’s very clear that the account has the right of survivorship. If your account registration document at the bank simply lists your names, and doesn’t mention joint tenancy or the right of survivorship, it might be a joint tenancy account, but it might not. If you’re in doubt, check with the bank and make sure the right of survivorship is spelled out if that’s what you want. There can be exceptions to this general rule, however. Most accounts but not all that are held in the names of two people carry with them what’s called the “right of survivorship.” In other words, after one co-owner dies, the surviving owner automatically becomes the sole owner of the funds. (It usually works in a similar way with retirement accounts as well.) If the account registration document at the bank simply lists two names, and doesn’t mention joint tenancy or the right of survivorship, it’s probably still a joint tenancy account, but it might not be. Utah, for example, has a strict requirement that to create a joint tenancy account, the account owners must sign a separate agreement, in addition to the bank’s registration card, creating the joint tenancy.
Possible Uncertainty After Your Death
If you and your spouse open a joint bank account together, it’s very unlikely that anyone would argue that the two of you didn’t intend for the survivor to own the funds in the account. But if you have a solely owned account and add someone else as a co-owner, it may not be so clear what you want to happen to the funds in the account after your death. Some people add another person’s name to an account just for convenience—for example, perhaps you want your grown daughter to be able to write checks on the account, to help you out when you’re busy, traveling, or not feeling well. Or you might want to give a family member easy access to the funds in an account after your death, with the understanding that the money will be used for your funeral expenses or some other purpose you’ve identified. Legally, however, the person whose name you add to the account will become the outright owner of the funds after your death. Unless there’s something in writing, there’s no way to know or enforce the terms of any understanding the two of you reached about how the money would be used. The new owner is free to spend the money without any restrictions. If other relatives think you had something else in mind, they may be resentful or angry if the surviving owner uses the money for personal purposes instead of paying expenses or sharing the money with other family members. If you want someone to have access to your funds only so they can use them on your behalf, there are better ways to do it. Consider giving a trusted person power of attorney (this gives them authority during your life), or leave a small bank account and instructions for its use after your death. Don’t make someone a co-owner on an existing account unless you want them to inherit the money without any strings attached.
Bank Accounts Held in Trust
If you’ve set up a living trust to avoid probate proceedings after your death, you can hold a bank account in the name of the trust. After your death, when the person you chose to be your successor trustee takes over, the funds will be transferred to the beneficiary you named in your trust document. No probate will be necessary. To transfer the account to your trust, tell the bank what you want to do. It may have some forms for you to fill out. Then the bank should adjust its records, and your account statements will show that the account is held in trust.
Disputes About What The Deceased Intended
If two people—a married couple, for example—open a joint account together, no one is going to dispute that when one of them dies, the survivor owns the funds in the account. The situation may be different, however, when an older person adds someone else’s name to his or her existing bank account. Often this is done to avoid probate at the original owner’s death. Sometimes, however, the second name is added only for convenience that is, so the other person can write checks on the account, helping out the original owner. Or the arrangement is intended to give the second person easy access to the funds after the original owner’s death, so that the funds can be used for the funeral or other expenses. Legally, however, the person whose name was added to the account becomes the outright owner of the funds when the original account owner dies. Unless there’s something in writing, there’s no way for anyone to enforce the terms of whatever understanding was reached earlier, about how the money would be used. The new owner is free to spend it on whatever he or she chooses. Family members who are sure that the deceased person wanted a different result are unlikely to be successful if they go to court to try to get the money back from the surviving joint account owner.
Closing A Bank Account After Someone Dies
These steps will explain how to close a bank account after someone dies:
• Executor/administrator will be required to contact the bank with proof of death – also note the executor/administrator must prove they are who they say they are by taking the will (or evidence to prove the relationship with the deceased).
• The bank will freeze the account.
• The executor or administrator will need to ask for the funds to be released – the time it takes to do this will vary depending on the amount of money in the account.
• Each bank will have their own guidelines for monetary amounts and release times. A typical amount for immediate release is between £15,000 and £50,000.
• The bank will usually request to see a Grant of Probate before releasing any funds. This is because they are legally obligated to check if they are releasing money to the right person.
• Once the bank is satisfied with the Grant of Probate, they will release the funds.
How to Avoid Probate
Avoiding probate doesn’t have to be difficult. Many people can use these simple and effective ways to ensure that all, or some, of their property passes directly to their heirs, without going through probate court,
• Revocable Living Trust: Living trusts were invented to let people make an end-run around probate. The advantage of holding your valuable property in trust is that after your death, the trust property is not part of your probate estate. (It is, however, counted as part of your estate for federal estate tax purposes.) That’s because a trustee not you as an individual owns the trust property. After your death, the trustee can easily and quickly transfer the trust property to the family or friends you left it to, without probate. You specify in the trust document, which is similar to a will, whom you want to inherit the property.
• Pay-on-Death Accounts and Registrations: You can convert your bank accounts and retirement accounts to payable-on-death accounts. You do this by filling out a simple form in which you list a beneficiary. When you die, the money goes directly to your beneficiary without going through probate. You can do the same for security registrations, and, in some states, vehicle registrations. More than half of the states also now allow transfer-on-death real estate deeds that take effect when you die.
• Joint Ownership of Property: Several forms of joint ownership provide a simple and easy way to avoid probate when the first owner dies. To take title with someone else in a way that will avoid probate, you state, on the paper that shows your ownership (a real estate deed, for example), how you want to hold title. Usually, no additional documents are needed. When one of the owners dies, the property goes to the other joint-owner, no probate involved. You can avoid probate by owning property as follows:
Joint tenancy with right of survivorship. Property owned in joint tenancy automatically passes, without probate, to the surviving owner(s) when one owner dies.
Tenancy by the entirety. In some states, married couples often take title not in joint tenancy, but in “tenancy by the entirety” instead. It’s very similar to joint tenancy, but can be used only by married couples (or in a few states, by same-sex partners who have registered with the state). Both avoid probate in exactly the same way.
Community property with right of survivorship. If you are married in Utah, (if you have registered with the state as domestic partners) and live or own property in Utah, another way to co-own property with your spouse is available to you: community property with the right of survivorship. If you hold property in this way, when one spouse dies, the other automatically owns the asset.
• Gifts: Giving away property while you’re alive helps you avoid probate for a very simple reason: If you don’t own it when you die, it doesn’t have to go through probate. That lowers probate costs because, as a general rule, the higher the monetary value of the assets that goes through probate, the higher the expense. And most gifts aren’t subject to the federal gift tax.
Why Avoid Probate?
Most of us have heard that it’s wise to avoid probate court, but we don’t necessarily know why. In a nutshell, there are two big problems with probate:
• It ties up property for months, sometimes more than a year.
• It’s expensive. In some states, attorney and court fees can take up to 5% of an estate’s value.
Most of what happens during probate is essentially clerical. In the vast majority of cases there’s no conflict, no contesting parties, none of the usual reasons for court proceedings. Probate rarely calls for legal research, drafting, or a lawyer’s adversarial skills. The probate attorney, or the attorney’s secretary, fills in a small mountain of forms and keeps track of filing deadlines and other procedural technicalities. In some states, the attorney makes a few routine court appearances; in others, the whole procedure is handled by mail.
Probate Fees: For their services, both the lawyer and your executor will be entitled to fees from your estate.
Executor fees: It’s common for the executor to waive the fee, especially if he or she inherits a substantial amount of your property.
Attorneys’ fees: In many states, probate fees are what a court approves as “reasonable.” In a few states, the fees are based on a percentage of the estate subject to probate. Either way, a probate attorney’s fees for a “routine” estate with a gross value of $400,000 (these days, this may be little more than a home, some savings and a car) can easily amount to $20,000 or more.
Other probate costs: In addition, there are court costs, appraiser’s fees, and sometimes other expenses.
Probate Lawyer In Utah
When you need a Utah Probate Lawyer, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you with probate administration, estate planning and more.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506