Joint or Separate Bank Accounts? Avoiding Financial Grief: How to Protect Your Significant Other from Frozen Accounts
The death of a loved one is one of the most difficult times in a person’s life. Nothing can truly prepare a person for such a loss. However, dealing with the financial stress of frozen bank accounts can exacerbate the stress. Without proper planning, your significant other could struggle to gain access to your accounts. The frustration is especially distressing if the frozen account was the primary source for paying joint or household expenses.
The frozen bank account situation occurs most commonly in instances where all bills are paid out of a single account that lists only one significant other as the account owner. When the account owner dies, the bank account becomes part of the decedent’s probate estate, resulting in stricter rules for access. In most instances, banks will allow deposits to continue; however, withdrawals are often prohibited.
The probate process can be very long and tedious. In more favorable situations, if the value of the estate is under a certain amount (as determined by state law), you may be able to utilize a small estate or informal probate process to eliminate some of the time-consuming requirements of a formal probate process. If that is the case, access to accounts may be granted in a more timely manner; however, it still requires some interaction with the court. Another option that many states provide is an affidavit process for collecting assets from financial institutions when the amounts are very small.
Avoiding Frozen Bank Accounts
Even though the grief of death cannot be avoided, you can employ several strategies to reduce the chances of your loved one being frozen out of a bank account that must be accessed immediately upon your incapacity or death.
Assessing Your Current Status
If you are unsure whether your significant other could be left struggling to access your account at the time of your death or incapacity, please consider the following questions to help you understand your accounts and develop a plan:
We Can Help You Plan
Planning for difficult situations like death or incapacity is never easy, but you do not have to do it alone. We are here to help you carefully craft the best plan for the people you care for the most. We are available for in-person and virtual meetings, whichever you prefer.
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