Do Joint Bank Accounts Go Through Probate?
In the majority of cases, joint bank accounts are not subject to the probate process. The probate process is a legal process that involves the administration and distribution of a person's assets after their death. Joint bank accounts are a common way for people, often couples, to pool their resources and manage their collective finances. A joint bank account allows two or more people to access, deposit, and withdraw funds without having to get permission from the other parties on the account. Additionally, this type of account provides a simple and convenient way for assets to be transferred to a surviving party upon the death of an account holder.
Unfortunately, being creative with joint bank accounts can create problems. Parents who add a child to a joint account often don’t realize that their account could be seized by their child’s creditors. Parents add a child to their joint bank account for convenience and expect that child to share the account with their siblings when the parent passes away. Beware, actual results may vary! The child learns the bank officer says the money is theirs to keep on the death of the joint owner, and that becomes the new plan after the parent passes away. We can help avoid these pitfalls because they are not rare. We offer a better way.
If you need help with going through probate in Arizona, then our legal team is ready to help. When working with our law firm, you will have an experienced legal team who have over 80+ years of combined probate and estate planning experience. Our team takes pride in taking the stress off of your shoulders and putting it on ours. We offer free consultations to help you determine what your next steps need to be.
What is Probate?
Probate is the legal process that takes place after a person's death to ensure the correct administration and distribution of their estate, which includes their assets and liabilities. The process is overseen informally or formally by a Court. The initial petition asks the Court to determine the authenticity of a deceased person's will, if one exists, and appoint a personal representative under normal circumstances. If there is no Will, the statutes govern. The Probate process is usually carried out by the Estate’s personal representative, who ensures the decedent’s assets are identified, their debts are paid, and their property is distributed according to their wishes or the statutes.
In a typical probate process, the following steps are involved:
- Filing a Petition: Probate begins when a petition is filed with the Clerk of Court to either admit the Will into probate and appoint the personal representative, usually without bond, or, if there is no Will, appoint a personal representative of the estate, usually with a bond, and determine who the lawful heirs are. At times a special administrator may be appointed in lieu of a personal representative.
- Notification of Heirs and Creditors: The next step involves notifying heirs, beneficiaries, and creditors about the start of the probate process. This is typically done through direct notices or publication in newspapers.
- Inventory of Estate: The personal representative and, when appropriate, special administrator is responsible for taking inventory of the deceased person's property and having it appraised. This includes real estate, stocks, bonds, business interests, and other assets.
- Payment of Debts and Taxes: The estate's liabilities, which include any debts and taxes, are then managed by the personal representative accepting, partially accepting, denying, or settling claims. This may include final income taxes, estate taxes, and other debts that the deceased had at the time of their death.
- Distribution of Remaining Assets: Once all debts and taxes have been paid, the remaining assets are distributed to the heirs or beneficiaries according to the terms of the Will or, if there is no Will, according to the intestate succession laws (statutes) of the state.
- Closing of the Estate: Finally, a petition is made to the Court for the distribution of the remaining estate, according to a final accounting, which the beneficiaries may contest, agree with, or waive. Once the Court approves the petition, the executor or administrator can distribute the assets to the beneficiaries, and the estate is closed.
In the case of joint bank accounts, they are usually not subject to the probate process. This is due to a provision known as the "right of survivorship," which is common in joint ownership situations. Under the right of survivorship, when one account holder dies, the assets in the joint account automatically pass to the surviving account holder, bypassing the probate process.
However, it's important to note that probate laws can vary greatly depending on the jurisdiction, so it's recommended to consult with an experienced attorney to understand the specific laws applicable to an individual's situation.
When Do Joint Bank Accounts Have To Go Through Probate?
However, there are some circumstances where a multi-party bank account may have to go through probate. One such circumstance is when the multi-party account holders retain individual ownership without a right of survivorship, and the account is held as "tenants in common."
Tenancy In Common: A "tenancy in common" is a type of co-ownership in which each party owns a separate and distinct share of the property (in this case, the bank account), which they can sell, give away, or leave to someone in their will. Unlike the right of survivorship, if one owner dies, their share doesn't automatically pass to the surviving owner(s). Instead, the deceased party's share of the account becomes part of their estate and would be subject to probate.
Once the probate process is complete, the deceased member's share of the multi-party bank account would then pass to their designated beneficiaries. Beneficiaries are individuals or entities that the deceased person has named in their will or estate plan to inherit their property. Therefore, the co-owner of the multi-party bank account would not automatically receive the deceased person's share of the account if it's held as tenants in common, but it would go to the deceased person's beneficiaries.
Contact An A Probate Attorney in Chandler
At the Golden Rule Law Group®, our team is dedicated to helping and representing you. You will have an experienced legal team who have over 80+ years of combined probate and estate planning experience. Our team takes pride in taking the stress off of your shoulders and putting it on ours.
Our firm primarily serves the areas of Chandler, Gilbert, Phoenix and other areas around Maricopa County. If you are in need of an experienced probate attorney in Arizona, please contact us today to schedule your free case evaluation.