So I was recently told by a family member that if you only have your name on your checking account, if you die or something along those lines, the money just goes to the government and it’s gone after you die. He’s insisting that I should get my father or someone else in the family to get their name on the account along with mine so that if something were to happen, they’d still have access to the account.
To me, it sounds crazy. Just because I die the government is gonna clean out my account and give it away to whoever they want? Is that how it actually works? Not having a lot of luck finding info on this by myself :(
They are confused. What they are referring to is that sometimes when a person dies any accounts under their name can get frozen by the bank (and sometimes by a judge) until a persons will is properly resolved. Especially in scenarios where there might be a lot of fighting and contesting of the will it would be quite prudent to make sure provision is made for cash to live on for any dependents.
What Flowers said. Any accounts with a single named account holder (be they bank accounts, retirement accounts or whatever) will become part of your estate and be frozen until the estate is settled. If there is an executor for the estate, they may be granted power over these accounts by the court while the estate is being settled, but only to pay debts and bills pertaining to the estate, not to hand out lump sums to family members.
The only way someone’s money reverts to the government is if they literally have no living relatives and no will or other document that might detail what they wanted done with the remainder of their estate upon death. Even then it can take a very long time before that money is released from the accounts.
The way to handle this isn’t to go sticking someone else’s names on your checks or opening joint accounts. Instead simply ask the bank for a Beneficiary Form, on which you can designate someone that would have access to the account in the event of your death. It’s a good idea for married couples with joint accounts to have a third party beneficiary in addition, just in case you’re both killed in the same accident or whatever.
Yeah. And having beneficiaries on your accounts (payable-on-death or in-trust-for, or whatever) bypasses the probate process, doesn’t it? Which will potentially save your heirs time and attorney’s fees.
I’m not sure you can have a right to succession that only activates upon the death of the account holder. IIRC, the other person on the account must have a present and equal right to the funds in the account for a right of succession to exist. The joint ownership is what takes it out of your estate, which consists of all of the property you owned at the time of death.
