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One of the main tasks an estate executor is responsible for after a person’s death is distributing their assets according to their will. Probate is the legal process of asset distribution. But you may wonder: “Do bank accounts with beneficiaries have to go through probate?”
The answer depends on how the decedent structured the account and a few other factors, such as whether you are operating under Hawaii probate laws or probate in another state. Learn more about probate and non-probate bank accounts.
Do Bank Accounts Go Through Probate?
Upon a loved one’s death, you must determine what to do with all of their assets and belongings, including bank accounts. The probate process helps oversee the distribution of a person’s assets according to their will and regional statutes. As a default, bank accounts typically go through probate unless they meet specific criteria that allow them to bypass this standard process.
Going through probate ensures that the funds in an account end up with the person the decedent intended for them to end up with. It provides a legal check that the estate executor has fulfilled their fiduciary duty and upheld the decedent’s wishes to the letter.
While probate can be a lengthy process, it is often necessary to ensure ethically sound outcomes after a person’s death. However, individuals can take steps to set up their estates to bypass probate. If your loved one structured their accounts a certain way, they may not need to go through the probate process.
Examples of Accounts That Can Bypass Probate
Do bank accounts with beneficiaries have to go through probate? Often, no. The following are some examples of accounts that may be able to bypass probate:
- Accounts with joint ownership: If the decedent owned the account jointly with another person, it will transfer to that person.
- Accounts with beneficiary designations: Some accounts, like retirement accounts and life insurance policies, allow policyholders to designate a beneficiary who would receive the account after their death. These can often bypass probate.
- Accounts with payable-on-death (POD) deeds: If an account has a payable-on-death deed, the bank can transfer funds to the beneficiary upon the account holder’s death. You must typically provide a death certificate and an affidavit from surviving heirs to initiate this transfer.
- Accounts held in a living trust: If the decedent transferred an account to a living trust before their death, the trustee will assume responsibility for it and can pass it directly to beneficiaries according to the trust’s guidelines.
What Accounts Cannot Bypass Probate?
So, do bank accounts with beneficiaries have to go through probate? They sometimes do, along with many other types of bank accounts.
If your loved one’s bank account meets these criteria, it likely will need to go through probate:
- It does not have a beneficiary designation
- It does not have a payable-on-death (POD) deed
- It is not part of a living trust
- It does not have a co-owner
Some states have Small Estate Exemptions, which allow estates worth less than a certain amount of money to bypass probate. If your loved one had a small estate, you can look into this exemption and potentially gain access to their accounts faster.
Other Types of Assets That Must Go Through Probate
Your loved one’s bank accounts likely won’t be the only assets that must go through probate before beneficiaries can receive them. Other probate assets include:
- Real estate without a joint owner
- Vehicles without another owner listed on the deed
- Personal property (jewelry, artwork, furniture)
- Businesses without a co-owner
- Stocks and bonds
Making a list of your loved one’s assets, including their bank accounts, is a necessary step in beginning the probate process and closing their estate. Once you make this list, you can evaluate whether any assets may be able to bypass probate.
What Normally Happens to a Bank Account After a Person’s Death?
Bank rules after death typically follow a straightforward process. If the account has a joint owner or beneficiary, that person will typically retain ownership under the right of survivorship. However, if the bank has any questions about the legitimacy of the joint ownership or the account’s beneficiaries, it may require the account to go through probate anyway as a legal check.
Meanwhile, sole ownership accounts become part of a person’s estate and are turned over to the probate court for distribution. The bank account becomes frozen until the probate process is complete. At this point, the bank would know who to add as a new account holder for the bank account in question.
This often means that a decedent’s loved ones cannot access their bank account to pay for funeral costs or medical expenses after their death. They must pay these expenses out of pocket and then reimburse themselves months or over a year after receiving their inheritance from the decedent.
Seek an Inheritance Advance From Rockpoint Probate Funding
Do bank accounts with beneficiaries have to go through probate? Sometimes, they do, but often, family members need to wait several months before they gain access to a loved one’s accounts after their death. Will contests and other disputes can prolong the probate estate process even further.
Rockpoint Probate Funding can help you make ends meet financially while you wait to close your loved one’s estate. We offer non-recourse inheritance advances with a fast and easy application process. Contact us today at 888-263-8588 for a free evaluation or to learn more about whether this might be the right option for you.
