This series is based on the book Who Gets Your Passwords? TheSeniorTechie Guide To Digital Estate Planning by Paul Wilczynski, published by TheSeniorTechie Press.
This week covers what happens to a bank account in one person’s name after a death, why a will may not be enough, and how naming a beneficiary on each account can help your family.
In this fictional example, Al had handled the household money for forty years. Bernice handled plenty of other things, and the arrangement suited them. He paid the bills online. She knew they had enough in checking.
After Al died, Bernice took his will to the bank. He had left everything to her. She expected paperwork, perhaps a signature or two.
The checking account was in Al’s name alone. Once the bank learned of his death, it restricted access while it determined who had authority to receive the money.
Then the automatic payments began failing. Three bills came back unpaid, including the homeowner’s insurance. Bernice had money of her own, but she hadn’t known those payments were due or which account paid them.
She sat at the kitchen table with the will beside her and the insurance notice in front of her. Al had been careful about paying every bill on time. She couldn’t understand how being careful had left her with this.
Their arrangement had worked for forty years. Neither had asked the bank what would happen when Al could no longer manage it.
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Why A Will May Not Be Enough
Financial institutions restrict certain accounts after a death to prevent unauthorized access. A will can identify who should inherit, but the institution still needs the documentation required to release the assets. An individually owned account without a beneficiary designation may have to pass through probate, the court-supervised process for settling an estate.
That creates a practical problem before it becomes an inheritance problem. The mortgage and insurance payments still come due while the family sorts out authority.
This week’s work is to check the beneficiary instructions attached to your accounts. Those instructions can let assets pass outside probate. They do not promise immediate access, and they do not replace a plan for paying bills during the handoff.
This article provides general information, not legal or financial advice. Ask a qualified professional about decisions involving your circumstances.
Check The Beneficiary On One Account
Choose one retirement or investment account. Sign in through the website or app you normally use, and find its beneficiary information. If you cannot find it, call the institution.
Read the names actually recorded there. Memory is not enough. A former spouse may still be listed. A parent named years ago may have died. An account opened during a retirement rollover, when savings moved from one retirement account to another, may have no designation you remember making.
Beneficiary instructions generally take precedence over conflicting instructions in a will. Changing the will alone may leave the account’s instructions untouched. Retirement plans can also have spousal rights and other requirements, so ask before making a change you do not understand.
Check the contingent beneficiary, too. That is the backup person or organization designated to inherit if none of the primary beneficiaries can receive the assets, subject to the account’s rules. Leaving that space blank can create problems if your first choice dies before you.
If you make a change, save the confirmation and check that the institution has accepted it. A form sitting on your desk has not changed the account.
Ask About Payable-On-Death And Transfer-On-Death
For a bank account, ask whether you can add a payable-on-death designation, often shortened to POD. For a nonretirement investment account, ask about transfer-on-death registration, or TOD. These arrangements name who should receive the assets after the owner’s death and can allow the transfer to happen outside probate.
A useful question for the bank is: “This account is in my name alone. What would my beneficiary need to provide to receive the money after I die?”
Ask about the claim process as well as the form. Fidelity’s TOD agreement, for example, requires beneficiaries to submit appropriate documentation before assets transfer. Naming someone does not mean they can withdraw money the moment they need it.
The designation may be quick to complete. Choosing the right person and understanding the consequences deserve more than a hurried guess.
What Happens To A Joint Account When One Owner Dies?
A joint account with rights of survivorship usually passes to the surviving owner. But joint accounts are not all titled the same way. The FDIC distinguishes survivorship accounts from arrangements in which a deceased owner’s share does not automatically pass to the survivor. Ask your bank which kind you have.
Adding an adult child as an owner is a decision about ownership, not merely permission to help with the website. Discuss it with the bank and your attorney before changing the account title.
If you are the adult child worried about a parent, start with a smaller question: “Does the bank have someone named to receive this account?” Your parent can check without showing you the balance or handing over a password.
Check Your PayPal, Venmo, And Cash App Balances
Include PayPal, Venmo, and Cash App when you check where money sits. Their balances belong on your financial account list, even if you mostly use the apps to reimburse friends or send birthday money. Zelle works differently: it moves money between enrolled bank accounts rather than maintaining a separate app balance.
Do not assume every part of an app has the same inheritance options. Cash App allows beneficiaries for its investing accounts, but explicitly says those designations do not apply to the general Cash App account. Its estate process may require a death certificate and documents showing authority to receive assets.
What To Do This Week
Log in to one retirement or investment account and read both the primary and contingent beneficiary entries. Correct anything outdated, or call the institution with your questions.
Open each payment app you use and record any balance in your account inventory. Then tell the person who will handle your estate the names of your financial institutions. You can start with names alone, without sending account numbers or login details.
Chapter Six also covers the autopay information your executor will need, safe storage of financial records, online-only accounts, business assets, cryptocurrency, and planning for incapacity. Those subjects need their own instructions; a beneficiary form cannot do all of that work.
Who Gets Your Passwords? puts those financial preparations into the larger plan your family will need. Use Chapter Six to work through the accounts they will have to reach and the bills they will have to keep paying.
