How to Ensure Family Access to Texas Bank Accounts After Death

Bank Account Access

When a Texas resident dies, finances are often an immediate concern to the surviving family. Between funeral costs, final medical expenses, and simply keeping up with the deceased’s bills, access to the deceased’s funds can be crucial to navigating the aftermath of a passing. Unfortunately, unless the deceased planned ahead, getting access to the money in a loved one’s savings or checking account after their death is often easier said than done.

Thankfully, one of the most effective measures one can take to guarantee their loved ones access to their bank accounts is also one of the easiest: designation of one or more death beneficiaries. Most banks will permit an account holder to name a person or persons as pay-on-death beneficiary of their account. When an account holder who has made a P.O.D. designation dies, the funds in their account do not become part of the account holder’s estate and are not subject to the terms of their will; instead, they belong immediately to the P.O.D. beneficiary. The beneficiary generally does not need to hire a lawyer or file anything in court to access the funds. They should be able to simply present the bank with proof of the death (e.g. a death certificate) as well as proof of their own identity, and the bank should release the funds directly to them. Note, however, that if the designated P.O.D. beneficiary is a minor, a court proceeding such as a guardianship may still be necessary, since minors are considered legally incapacitated and cannot receive death payouts directly. One way to get around this hurdle if one intends to designate a minor child as death beneficiary on a bank account would be to name a custodian to manage the funds for the minor until they reach majority. This can be done in the beneficiary designation itself or by separate written agreement with the chosen custodian.

For holders of joint bank accounts such as married couples or parents and their children, another helpful tool to guarantee account access in the event of death is to have the bank add a right of survivorship to the account.  By default, holders of joint accounts do not have a right of survivorship to the funds in the account; that is, the money in the account does not automatically become the sole property of the surviving account holder if the other holder dies. Instead, whatever funds within the joint account belonged to the deceased account holder pass either to their designated death beneficiary if they had one, or else to their estate. By requesting that the bank add the right of survivorship to the terms of the joint account, the account holders can instead elect that if one of them dies, the survivor becomes the sole owner of all of the funds in the account, no matter which one originally deposited them.

Neither the P.O.D. beneficiary designation nor the right of survivorship to a jointly held account is a perfect tool for estate planning, and both can have their purposes frustrated under certain circumstances. If an account holder on a P.O.D. account or a joint account with right of survivorship is married, for example, and the P.O.D. designee or survivorship holder is not their spouse, there could be a legal dispute over whether the surviving spouse is entitled to a portion of the account proceeds as her share of community property. Additionally, neither the P.O.D. designation nor the right of survivorship places the funds in an account off-limits to claims by creditors of the account holder’s estate. Nonetheless, these easy and low-cost measures should be among the options you and your attorney discuss when planning for an unexpected passing in Texas. 

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