Beneficiaries, Bank Accounts & Wills: Making Sense of the Details

Question: My father died many years ago. My mom died last month and my sister says that my mom’s bank account goes to her because she is the only listed beneficiary on the account. My mom’s will says that everything should be split three ways between the three kids. Who is right?

Answer: In short, your sister is correct.

The California Probate Code recognizes 3 types of bank accounts that will avoid going through probate – a joint account, a “P.O.D (payable on death) account”, and a Totten trust account (a specific type of P.O.D. account). In the case of a joint account, the money would go to the other joint owners on the account. In the other cases, there are one or more beneficiaries listed on the account, to which the money will go. Since you mention that your sister was the only listed beneficiary, that indicates that your mom must have had a P.O.D. or Totten trust account.

Listing a person as a beneficiary on a bank account is a way of transferring assets in the event of the account owner’s death without having to go through probate. To receive the funds, the beneficiary only has to present a copy of the death certificate and personal identification authenticating that she is the person listed as the beneficiary on the account.

According to Section 5302 of the California Probate Code, any funds remaining on a P.O.D account belong to the beneficiary as against the estate. Your mom’s will only governs assets that do not otherwise have a designated beneficiary. Thus her will property does not include the P.O.D bank account. Your sister, as the sole beneficiary on the account, will be the only recipient of those funds.

Question: Do checking accounts have beneficiaries?

Answer: Unlike some other accounts, checking accounts are not required to have named beneficiaries. Even though they’re not needed, you may want to consider designating beneficiaries for your bank accounts in order to protect your assets.

Due to increasing interest, many banks offer their customers payable-on-death (POD) accounts as part of their standard offerings. An existing checking account can be converted into a POD account, which instructs the bank to pass on all the client’s assets to the named beneficiary.

Assets Not Governed by a Decedent’s Will

There are several other assets that may have a designated beneficiary and will not be governed by a decedent’s will. These commonly include “transfer-on-death” accounts for securities, “transfer-on-death” registration for vehicles, “transfer-on-death” deeds for real estate, and proceeds from life insurance.

Either your mom opened up a specific P.O.D. account just for your sister or she converted an existing checking or savings account into a P.O.D. account. This conversion is very easy to do and simply entails signing some forms provided by the bank.

If you feel strongly that the transfer of the bank account assets solely to your sister would be against your mom’s wishes and have evidence to the contrary, it is advisable to contact an attorney specializing in estate planning. Although it may seem clear that your sister will receive all the funds as the sole beneficiary, California probate law does allow an interested party to show “clear and convincing evidence of a different intent,” though that is often difficult to provide.

The good news is that you do not have to wade through this process alone. Our firm is led by an experienced estate planning attorney who truly cares about the individuals she represents. With Randick O’Dea Tooliatos Vermont & Sargent backing your efforts, you can have confidence in whatever the future holds.

Get your questions answered today! Contact our firm for trusted legal counsel throughout Alameda County and Castro Valley, California.