How to structure bank accounts to make them accessible upon death?
June 21, 2017 8:18 AM Subscribe
My wife is a stay at home mom and I'm wondering what happens to our cash flow if I were to die unexpectedly. We already have pretty detailed attorney-written wills, our house is under both of our names, but will my personal bank account become inaccessible until it goes through probate?
What's the best way to make sure my family has uninterrupted access to my bank account upon my death? Should my paycheck be going into a joint account instead? What about my 401k and stock accounts? Some of these predate our marriage.
I'd appreciate any experience you folks have had with this and suggestions on how to make the process smoother.
What's the best way to make sure my family has uninterrupted access to my bank account upon my death? Should my paycheck be going into a joint account instead? What about my 401k and stock accounts? Some of these predate our marriage.
I'd appreciate any experience you folks have had with this and suggestions on how to make the process smoother.
> What's the best way to make sure my family has uninterrupted access to my bank account upon my death?
Ensure she's a joint owner. If you don't want to go this route, you'll at least want to designate her a POD (payable on death) beneficiary, in which there will be a period of no access to the account until she brings the proper documentation of your passing to the bank, whereupon she'll get a check or can designate another account for deposit of the contents.
> Should my paycheck be going into a joint account instead? What about my 401k and stock accounts?
Your joint account should have enough of a buffer to cover the aforementioned scenario.
401K and stock accounts, designate her a TOD (transfer on death) beneficiary so she can assume all the contents of those accounts after going through the same process as described.
If you do both of these things, neither will need to go through probate.
posted by Karaage at 8:41 AM on June 21, 2017 [5 favorites]
Ensure she's a joint owner. If you don't want to go this route, you'll at least want to designate her a POD (payable on death) beneficiary, in which there will be a period of no access to the account until she brings the proper documentation of your passing to the bank, whereupon she'll get a check or can designate another account for deposit of the contents.
> Should my paycheck be going into a joint account instead? What about my 401k and stock accounts?
Your joint account should have enough of a buffer to cover the aforementioned scenario.
401K and stock accounts, designate her a TOD (transfer on death) beneficiary so she can assume all the contents of those accounts after going through the same process as described.
If you do both of these things, neither will need to go through probate.
posted by Karaage at 8:41 AM on June 21, 2017 [5 favorites]
Most financial institutions in most states will allow you to designate an account as "payable on death" (POD) or "transferable on death" (TOD), which means what it sounds like: upon proof of death, the institution will pay the funds over to the named beneficiary. Similarly, you can name beneficiaries for retirement and many investment accounts. Often you can do it online; it's very easy to set up.
If you really have no joint account at all, you should set one up with some money in it. The POD/TODs usually pay pretty quickly, but you'll need to cover a couple weeks' expenses.
(Also, geez, I really hope I'm misunderstanding you or missing something: I know people make varying financial arrangements work in marriage, but if I had a friend who was not working (and didn't have her own money from some other source) and didn't have some form of access to a household account, I'd be deeply concerned about whether she was safe in that marriage. Can you possibly be saying that right now your wife has no income and no access to your income?)
posted by praemunire at 8:43 AM on June 21, 2017 [8 favorites]
If you really have no joint account at all, you should set one up with some money in it. The POD/TODs usually pay pretty quickly, but you'll need to cover a couple weeks' expenses.
(Also, geez, I really hope I'm misunderstanding you or missing something: I know people make varying financial arrangements work in marriage, but if I had a friend who was not working (and didn't have her own money from some other source) and didn't have some form of access to a household account, I'd be deeply concerned about whether she was safe in that marriage. Can you possibly be saying that right now your wife has no income and no access to your income?)
posted by praemunire at 8:43 AM on June 21, 2017 [8 favorites]
Your question is somewhat oddly worded. A thing that is worth knowing about this whole business (which people have given you great advice about already) is that the bank doesn't really know you've died. That is, when my father died we had access to his bank accounts because we had access to his online accounts and his ATM for weeks and could use it to pay bills and etc.
So for now you should
- have a joint account with your wife just because (as praemunire says) this doesn't have to include all your assets. But also know that a joint account means she has full access to it before your death as well as after.
- make sure all of your assets are payable on death or transferable on death to your wife, this is usually not that tough to set up with 401Ks and the like
- make sure she knows about your assets generally speaking (or has access to a list of them) so that she or your lawyer or an executor can go through the process of doing all this if something should happen to you and know what that process is, think of it like a fire drill
posted by jessamyn at 8:49 AM on June 21, 2017 [2 favorites]
So for now you should
- have a joint account with your wife just because (as praemunire says) this doesn't have to include all your assets. But also know that a joint account means she has full access to it before your death as well as after.
- make sure all of your assets are payable on death or transferable on death to your wife, this is usually not that tough to set up with 401Ks and the like
- make sure she knows about your assets generally speaking (or has access to a list of them) so that she or your lawyer or an executor can go through the process of doing all this if something should happen to you and know what that process is, think of it like a fire drill
posted by jessamyn at 8:49 AM on June 21, 2017 [2 favorites]
I am not an expert, however, I assume that POD means that you would have to provide the bank with proof of death, generally a death certificate. Depending on where you are, those can take several days to a week to obtain (in my experience), which means that if that is the only option, she could not have access for that time period.
In order to make sure there is uninterrupted access, she would need to be a joint owner on the account.
posted by needlegrrl at 8:58 AM on June 21, 2017
In order to make sure there is uninterrupted access, she would need to be a joint owner on the account.
posted by needlegrrl at 8:58 AM on June 21, 2017
I assume that POD means that you would have to provide the bank with proof of death, generally a death certificate
That's part of it, you typically also need a medallion signature which is pretty much a way to verify your identity along with that of the deceased.
posted by JoeZydeco at 9:02 AM on June 21, 2017
That's part of it, you typically also need a medallion signature which is pretty much a way to verify your identity along with that of the deceased.
posted by JoeZydeco at 9:02 AM on June 21, 2017
Response by poster: Can you possibly be saying that right now your wife has no income and no access to your income?
Hmmm... yes, that is accurate, she pays for our household expenses through a credit card that I pay off at the end of each month. She has her own pre-marriage bank account that stays untouched. We kind of just fell into this, we didn't plan anything out.
Other than having our wills made we appear to have planned pretty poorly but we're going to fix it! I've already sent her a link to this discussion.
posted by exhilaration at 9:10 AM on June 21, 2017 [2 favorites]
Hmmm... yes, that is accurate, she pays for our household expenses through a credit card that I pay off at the end of each month. She has her own pre-marriage bank account that stays untouched. We kind of just fell into this, we didn't plan anything out.
Other than having our wills made we appear to have planned pretty poorly but we're going to fix it! I've already sent her a link to this discussion.
posted by exhilaration at 9:10 AM on June 21, 2017 [2 favorites]
Given your update, you also need to make sure she knows what your bills are and how to pay them. This may seem obvious, but it varies a lot based on where you live. Do you pay for water? For garbage collection? HOA fees? Do bills arrive in the mail or are they emailed to an account she doesn't have access to?
When my husband died unexpectedly we had a joint account and I paid a lot of the bills, but I was still going through mail and his email account that happened to be logged in on a tablet to figure things out. I think your wife would have an even harder time.
Also, you didn't ask about this, but life insurance. In her situation it should be substantial and she should be the beneficiary.
posted by jeoc at 9:51 AM on June 21, 2017 [5 favorites]
When my husband died unexpectedly we had a joint account and I paid a lot of the bills, but I was still going through mail and his email account that happened to be logged in on a tablet to figure things out. I think your wife would have an even harder time.
Also, you didn't ask about this, but life insurance. In her situation it should be substantial and she should be the beneficiary.
posted by jeoc at 9:51 AM on June 21, 2017 [5 favorites]
Putting aside what it says about the power dynamic in the relationship (I'd question whether anyone could just "fall" into a situation where they have no access to money), it's a really bad idea not to have your spouse have some access to ready cash for emergencies. You should set up a joint account regardless of the death considerations.
posted by praemunire at 9:51 AM on June 21, 2017 [6 favorites]
posted by praemunire at 9:51 AM on June 21, 2017 [6 favorites]
Sounds like it's time for some planning, so it's awesome that you've asked this question. Your wife should have access to, at absolute minimum, monies to cover the household expenses for a few months. This will mean a joint bank account. As others have stated above having her as POD/TOD on all of your accounts, and making a listing of all accounts will make her life much easier in the event. She should also be protecting and building her credit as if you were to die, she would NEED to have good established credit to continue life as 'normal'. Your money dynamics in your marriage are your business, but maybe consider the power dynamic that is currently happening?
posted by PorcineWithMe at 10:28 AM on June 21, 2017 [1 favorite]
posted by PorcineWithMe at 10:28 AM on June 21, 2017 [1 favorite]
Also, be sure to think about *any* additional assets either of you might need access to after the other's death. I had a heck of time getting access to a forgotten account of my mother's after her death, and I had durable power of attorney, etc. It was the only one she hadn't put me on as a joint owner. Joint ownership makes things easier, and no attorney is needed.
So, check insurance (all kinds, health, life, long term care, etc), annuities, property deed/title/mortgage, car titles, etc etc.
posted by dbmcd at 10:49 AM on June 21, 2017 [1 favorite]
So, check insurance (all kinds, health, life, long term care, etc), annuities, property deed/title/mortgage, car titles, etc etc.
posted by dbmcd at 10:49 AM on June 21, 2017 [1 favorite]
On a purely practical level, you need a shared password manager. If she has access to online banking, she can effectively do 99% of what needs to be done, as long as she herself does not inform the bank of your passing.
posted by rada at 11:21 AM on June 21, 2017 [1 favorite]
posted by rada at 11:21 AM on June 21, 2017 [1 favorite]
you need a shared password manager
I don't know about other commercial offerings, but I just set this up in Lastpass for my spouse. They have an inactivity timer after which a designated person (by their email address) is allowed to request access to your password store. The default is a week, but you can set it to whatever you like.
This could easily contain all of the login info for your bank account (as mine does, in fact).
Note that this also makes it really easy for us to share passwords on a per entry basis as needed even while we're alive.
posted by bonehead at 11:59 AM on June 21, 2017 [2 favorites]
I don't know about other commercial offerings, but I just set this up in Lastpass for my spouse. They have an inactivity timer after which a designated person (by their email address) is allowed to request access to your password store. The default is a week, but you can set it to whatever you like.
This could easily contain all of the login info for your bank account (as mine does, in fact).
Note that this also makes it really easy for us to share passwords on a per entry basis as needed even while we're alive.
posted by bonehead at 11:59 AM on June 21, 2017 [2 favorites]
I also hope you have at least 10x of your annual income in term life insurance.
posted by rockindata at 12:20 PM on June 21, 2017 [1 favorite]
posted by rockindata at 12:20 PM on June 21, 2017 [1 favorite]
A thing that is worth knowing about this whole business (which people have given you great advice about already) is that the bank doesn't really know you've died. That is, when my father died we had access to his bank accounts because we had access to his online accounts and his ATM for weeks and could use it to pay bills and etc
Proceed with caution. In my jurisdiction, this is illegal. To that end, "make primary account joint" is literally at the top of the list.
On a practical basis, if your bank does POD and your credit cards are joint, not just listing your wife as an authorised user, she can coast on a credit card until she has death certs in hand to trot down to the bank. We're talking about a week.
Please pre-pay both of your funerals. That way she doesn't need to drop $6K in that week.
posted by DarlingBri at 3:42 PM on June 21, 2017
Proceed with caution. In my jurisdiction, this is illegal. To that end, "make primary account joint" is literally at the top of the list.
On a practical basis, if your bank does POD and your credit cards are joint, not just listing your wife as an authorised user, she can coast on a credit card until she has death certs in hand to trot down to the bank. We're talking about a week.
Please pre-pay both of your funerals. That way she doesn't need to drop $6K in that week.
posted by DarlingBri at 3:42 PM on June 21, 2017
In addition to all the good advice above, you should consider how best to negotiate a situation where you are alive, but incapacitated. If you are hospitized long term bills still need to be paid and any disability payments from your employer would be likely to go through the same direct deposit.
This can be done through switching totally to a joint account, setting up an automated transfer of some portion of salary to a new joint account or some other solution. Just don't think that death is the only possibility to prepare for.
posted by thatquietgirl at 5:07 PM on June 21, 2017 [1 favorite]
This can be done through switching totally to a joint account, setting up an automated transfer of some portion of salary to a new joint account or some other solution. Just don't think that death is the only possibility to prepare for.
posted by thatquietgirl at 5:07 PM on June 21, 2017 [1 favorite]
This post on the Blue has lots of information about estate planning.
posted by soelo at 8:37 AM on June 28, 2017
posted by soelo at 8:37 AM on June 28, 2017
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But for now, you should (and your lawyer should have told you this) have at least one joint account with right of survivorship (most joint accounts automatically have this, but not all) that can get your wife through six months of going through probate.
posted by Etrigan at 8:34 AM on June 21, 2017 [5 favorites]