Ask the Expert: Establishing different kinds of joint accounts
I have a joint savings account with my 95-year-old father in the amount of $300,000. The purpose of me being on the account is to pay final expenses. I'm also the executor of his will. After I pay final expenses, can I just distribute the remaining amount in equal shares to my four siblings?
You and your father clearly have "convenience" joint account: He owns the account, and you administer on his behalf. You should document that fact before carrying out your duties as his executor.
Bank customers and bank staff are often confused about the important differences between convenience joint accounts and joint accounts with right of survivorship.
A convenience joint account is solely funded and owned by one person. At that person's death, the account passes to his estate and his executor distributes it to the heirs listed in his will. By contrast, a joint account with right of survivorship is owned equally by both people named on the account and passes to the survivor; it isn't governed by the decedent's will. The card bank customers sign when they open a joint account should indicate whether they want the right of survivorship to apply to it — but often, it doesn't. Some bank cards don't even offer the option of designating a joint account as a convenience account.
But an account can be deemed to be a convenience account even if it isn't labeled that way, says Eric Kramer, a Uniondale estate lawyer. His advice: Before you distribute equal shares to your siblings, all of you should sign a general release drafted by a lawyer. The release should include language saying this account was considered a convenience account.
The bottom line
There are important legal differences between joint accounts for convenience and those with right of survivorship.