Know Risks Before Using Joint and Survivor Bank Accounts

Q: I’ve heard that having your bank accounts held in joint and survivorship is a good idea. Is that correct?
A: Yes and no. It’s a good idea because having a named survivor on the account will avoid probate when someone dies. However, it can also be a bad idea.

Q: Why might naming a survivor on an account be a bad idea?
A: When you register the account as joint and survivor you are making a contract with the bank. Remember that signature card that you signed? That’s a contract between you and the bank. Part of that contract says that the bank will turn the account over to the survivor when you die. But also included in the contract is your acknowledgment that the other individual has an equal right to access the account while you are living. In other words, you agree to share the account with the other person, even if it means allowing that person to draw down the account to nearly nothing. Between a husband and wife, that may be okay, but with someone else, it may not.

Q: I’m older and I live alone. My neighbor and I have a joint and survivor account so she can help me with my bills. It’s very convenient for me.
A: It might be convenient, but it’s also risky. If your neighbor has credit problems, you risk losing your money to your neighbor’s creditors. What if your neighbor is sued for divorce? Your joint account could be tied up in those proceedings.

Also, do you intend for your neighbor to have that money when you die? Often, a parent makes an account joint and survivor with one of his or her children for convenience. The child may promise to split the account with the other siblings when the parent dies, but if the child decides not to share, there is nothing anyone can do about it.

Q: If it’s risky to set up a joint and survivorship account for convenience purposes, what can I do?
A: If you wish someone to receive the account upon your death, and you wish to avoid probate, simply make the account P.O.D.—payable on death. The account will still be paid at death, but during your lifetime, only you have any rights to the account. If you wish someone to help with your bills, give that person a limited power of attorney for the account. With a P.O.D. account, you keep control, you still avoid probate, and you minimize the risk.


This "Law You Can Use" consumer legal information column was provided by the Ohio State Bar Association. It was prepared by attorney John R. Wanick, with the Toledo law firm of Anspach, Meeks Ellenberger, LLP.​

Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.



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