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Joint bank accounts and death: What you should know

A lot of people have joint bank accounts because they want their spouse, parents or favorite niece to have access to the funds in case an emergency happens.

However, if someone dies, the rules about what happens to those joint accounts may surprise the survivor, unless the account was set up properly.

In Nebraska, having a joint bank account does not automatically entitle the other person to the funds in the account if one of owners dies. That is different than a lot of other states, which confer automatic ownership of the whole account to the survivor.

If you want the person listed on your joint account to have ownership of all of the funds in the account, it's necessary to set the account up with a "payable on death" (POD) designation.

There are some advantages to POD designations:

  • You can designate the funds to go to more than one person, in which case they're presumed to be equally divided.
  • You don't have to risk losing control of your bank account to the other person listed on the account. In fact, the other person doesn't need to have access to the bank account at all while you are alive in order to collect the money after you pass away (which negates the need for joint bank accounts for many people).
  • All the money in the account automatically belongs to the person or persons designated as the payee -- which means it doesn't have to go through the probate court.
  • You can also set up certificates of deposit and other assets that might be held through your bank the same way.

If the account doesn't have a POD designation, then the account will be frozen and become part of your estate. If you have a will, it will be dispersed according to the terms of your will. If you don't, it will be dispersed according to the state laws that take over when someone dies intestate, or without a will.

An attorney can provide more information about how to manage your estate so that your assets go where you want them to go with the least amount of governmental intrusion.

Source: Nebraska Legislature, "Nebraska Revised Statute 30-2723," accessed Sep. 18, 2017

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