Ask the Expert: Joint accounts usually inherited by the survivor

If two siblings who live together have joint ownership in bank savings and checking accounts, when the first sibling dies, is there any problem with the surviving sibling continuing to access the accounts immediately? I assume the survivor will have to get new checks in one name eventually. Is that correct?

When two people own a bank account jointly with right of survivorship, the surviving owner automatically inherits the entire account, regardless of their personal relationship. They can be siblings, spouses, parent and child, lovers or just good friends.

A surviving joint owner has uninterrupted access to the account. But he or she should promptly give the bank a copy of the decedent’s death certificate. After receiving that document, the bank will transfer the joint account funds into a new account in the survivor’s sole name.

The above rules make joint accounts a quick and convenient form of estate planning. But they can sometimes lead to unintended consequences.

For example, let’s say you’ve named your daughter as joint owner on your bank accounts so she can pay bills for you. At your death, that daughter will inherit 100% of those accounts, even if your will says otherwise. Wills have no control over jointly owned assets. (That’s why the bank can quickly transfer them to the surviving owner: It doesn’t matter what your will says.)

Section 678 of New York’s banking law provides a solution by letting banks offer joint accounts that are designated “convenience-only.” The other person you name on this type of joint account has no ownership rights, during your lifetime or after your death. Unfortunately, most banks don’t offer convenience-only joint accounts, and many aren’t even aware of them.

The bottom line

Jointly-owned assets pass to the surviving owner.

More information

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