It is hard to think about the modern world without bank accounts. These financial accounts are excellent tools for personal wealth management and financial protection. However, what happens to someone’s bank account upon death? Must bank accounts undergo probate in Florida? Keep reading to find out.
Do Bank Accounts Go Through Probate in Florida? – The Fundamentals
When someone dies owning an account titled in his/her sole name without designating a payable-on-death beneficiary, the account will likely go through probate before the money held into it can be inherited.
Nonetheless, if the total value of the decedent’s estate qualifies as a “small estate” under Florida law, the decedent’s heirs and beneficiaries may inherit the money held in the account in a much simpler and cheaper manner.
As provided by Florida Statutes §735.301 (1), “No administration shall be required, or formal proceedings instituted upon the estate of a decedent leaving only:
- Personal property exempt under Fla. Stat. §732.402
- Personal property exempt from the claims of creditors under the Constitution of Florida
- Nonexempt personal property the value of which does not exceed the sum of the amount of preferred funeral expenses and reasonable and necessary medical and hospital expenses of the last 60 days of the last illness”
Bank Accounts vs. Probate – Are There Feasible Ways to Avoid It?
One of the simplest and most efficient ways to leave a bank account to someone upon death is by designating one or more persons as a “payable-on-death” (POD) beneficiary. The process is fairly simple – the owner of the account must file out and submit a bank-issued form to complete the process.
As POD accounts are not probated estate under Florida law, the money held in the account can be rapidly transferred to the designated beneficiaries once the owner of the account passes away.
Once designated by the owner of the account, the beneficiary can claim the money only after the principal’s death – never before. The named beneficiaries will be listed with the bank; therefore they will know the rightful heirs have the legal authority to receive the funds.
Jointly Owned Accounts and Rights of Survivorship
When someone owns a jointly held bank account with a trusted person (typically, a spouse), the surviving co-owner automatically becomes the account’s sole owner upon the death of the other principal.
In fact, most bank accounts held in the names of married couples carry a “right of survivorship” with them. Typically, this type of account is titled in the name of both tenants plus the description “Joint Tenants WROS (abbr. “with right of survivorship”).”
However, the account registration document must spell out the terms “joint tenancy” or “right of survivorship.” Otherwise, if the account registration does not explicitly outline it, the account will likely go through probate.
Bank Accounts Held in Trust
In Florida, it is possible to title a bank account in the name of a living trust to avoid probate. After the principal’s death, the appointed trustee of the trust will transfer the funds held in the account to the beneficiaries named in the trust agreement.
Yet, like other efficient estate planning tools, it requires legal guidance, as the bank will need to adjust its records, and the trust agreement must include specific language. Ultimately, the best approach is to contact an expert probate attorney.