Updated: Sep 24, 2021
This column first appeared on the MySA Express-News website on December 24, 2014.
Dear Mr. Premack: If I and a friend had a joint bank account here in San Antonio at a regular bank, could one person close out or do other things to the whole account? – SC
Banks offer a variety of different account arrangements. You may be referring to a joint checking or savings account. Legally, the word “joint” does not give a complete picture of the legal rights of any co-signatories to the account. Here is a list of account types, the variations that exist, and the legal rights attached to the variations. The joint account held by you and your friend could be any of #4 through #8. Get a photocopy of the account agreement and have your estate planning attorney review it to be sure it operates as you expect.
1. Individual account. The account agreement is in one person’s name only. Only the single signer has ownership of the funds in the account, has access to the funds in the account, and has the right to close the account. When the single signer dies, the funds pass according to the terms of the signer’s Last Will and Testament.
2. Individual account with Convenience signer. The account agreement is in one person’s name only, with a second person added as an assistant. Only the account’s creator has ownership of the funds in the account, but both the owner and assistant have access to the funds in the account. Though the assistant can withdraw all the funds in the account, only the creator can close the account. Further, the creator can remove the assistant at any time. When the creator dies, the funds pass according to creator’s Will.
3. Individual account with pay on death (POD) designation: All of the features are the same as an individual account, except that upon the signer’s death the funds are paid to the designated beneficiaries. However, while the signer is living those beneficiaries have no ownership of or access to the account.
4. Joint “or” account. The account agreement is in both names. Each account holder has ownership of the funds deposited by that holder, but does not own funds deposited by the other holder. Both holders, however, have full access to all he funds in the account; either of them can withdraw all the funds in the account. It takes both holders to close or to make other changes to the account. When one depositor dies, the funds belonging to that depositor pass according to that depositor’s Will.
5. Joint “and” account. This is exactly like the joint “or” account, except that two signatures are required for any account activity, including closing the account.
6. Joint account with right of survivorship (ROS). This may be an “or” account or an “and” account, with the added feature that when one depositor dies, the funds become the property of the other depositor. This happens without probate and takes legal priority over the terms of the deceased depositor’s Will. Thus, depositors must be careful to coordinate their Wills and ROS accounts so there are no contradictions.
7. Joint account with pay on death (POD) designation. When either depositor dies, the portion of funds belonging to that depositor are distributed to the designated beneficiaries. The funds belonging to the surviving depositor are still the property of the surviving depositor.
8. Joint account with right of survivorship (ROS) and pay on death (POD) designation. At the first depositor’s death, all the funds belong to the surviving depositor. At the second depositor’s death, all the funds are distributed to the designated beneficiaries without probate.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and business entity issues. View past legal columns or submit free questions on legal issues via www.Premack.com.