Do bank accounts have to go through probate? The general rule is yes. Regular bank accounts have to go through probate. But there are some special types of bank accounts that do not.
Types of bank accounts that do not have to go through probate
Regular bank accounts do have to go through probate, but the following special types of bank accounts do not have to go through probate:
- bank accounts under trust
- bank accounts that are payable on death
- bank accounts that are held jointly with rights of survivorship
In addition, bank accounts that are part of small estates may be withdrawn without going through the formal probate process.
Bank accounts under trust. These types of bank accounts do not have to go through probate because they are not a part of the estate of the person who died. They were transferred out of the name of the person during their lifetime and transferred into the name of the trust. Just having a trust document during the lifetime is not enough. The bank account has to actually be transferred into the trust. Let’s say the name of the person who died is John Doe. The bank account would not have his name on it. Instead, it would belong do John Doe Trust. Or Doe Family Trust. Or 12345 Secret Trust. You get the idea. Because the account is not in the name of the person who died, it’s not a part of his estate.
Bank accounts that are payable on death. These accounts have the name of a post-death beneficiary built into them. The law states that these kinds of beneficiary designations supersede probate.
Bank accounts that are held jointly with the right of survivorship. Survivorship property supersedes probate. Property held in survivorship title means that the account belongs to the survivor on the account.
If you are asking do bank accounts have to go through probate, we at the Law Offices of Albert Goodwin are here for you. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.
Contested non-probate accounts
Sometimes people who would be entitled to probate contest special account designations such as trusts, payable on death and survivorship beneficiary designations, claiming them to be products of financial abuse and undue influence. We at the Law Offices of Albert Goodwin have extensive experience litigating these types of cases.
The probate process for regular bank accounts
When a loved one dies, the only way to transfer their assets to the next of kin is usually through the probate process. If your loved one died without will, you need to file a petition to become an administrator in order to access the loved one’s assets. If your loved one died with a will, you need to file a petition for probate and to be appointed as executor.
However, if your loved one’s estate is below $50,000 and does not have any real property, you may be able to withdraw an amount from the bank account just by executing a small estates affidavit. Now, it becomes a question of, how do you know when your loved one’s estate is below $50,000? How do you value an estate?
As previously mentioned, if a bank account is under a trust, payable on death to a beneficiary, or held jointly with rights of survivorship, this does not form part of the gross estate of your loved one.
For example, your spouse died leaving a house in Queens that you purchased together as husband and wife, a one-bedroom apartment in Manhattan worth $300,000 placed under a trust with your only child, A, as beneficiary, a bank account with $50,000 that you both hold together jointly, a life insurance policy worth $100,000 designating you as the beneficiary, and a separate bank account in her own name for $10,000. How much is the value of your spouse’s estate for purposes of determining the appropriate probate process? In this case, the gross value of your spouse’s probate estate is only $10,000, and this would qualify under a small estate. You can withdraw the money in the bank account under a small estates affidavit.
Why is the value of your spouse’s probate estate only $10,000? First, the Queens house is real property under tenancy by the entirety, having purchased it together as husband and wife. Upon your spouse’s death, the Queens house automatically transfers to you without need of probate. Second, the Manhattan apartment is under a trust with a designated beneficiary and also does not form part of the probate estate. Third, the life insurance policy has you as a beneficiary. The proceeds automatically transfer to you upon your spouse’s death. However, if the designated beneficiary is dead or there is no designated beneficiary in an insurance policy, it will form part of the deceased’s probate estate. Given above, only the bank account in your spouse’s name with $10,000 is the only property in your spouse’s gross estate. Since it falls below $50,000, this bank account does not have to go through probate and money can be withdrawn by executing a small estates affidavit.
Suppose that we have the same facts as above, except that your spouse died with a wrongful death action against the nursing home who cared for her prior to her death, how much is the value of your spouse’s estate and can you withdraw the $10,000 from the bank account using a small estates affidavit? In this case, even if the value of your spouse’s probate estate is $10,000, the estate is not considered a small estate anymore due to the possibility of being awarded more due to the wrongful death action. For this reason, the estate does not qualify as a small estate that can allow you to withdraw the $10,000 from the bank account under a small estates affidavit.
Suppose however that we have the same facts again, except this time, there is no wrongful death action and the Manhattan apartment was not placed in a trust, can you withdraw the $10,000 in the bank account using a small estates affidavit? In this case, the value of your spouse’s probate estate is $310,000 because the Manhattan apartment is included in the probate estate, not being part of a trust. Thus, the money in the bank account has to go through probate and cannot be withdrawn using a small estates affidavit.
SCPA 1310 small estates affidavit
Under the Surrogate’s Court Procedure Act (SCPA) § 1310, certain persons can collect up to $50,000 of the deceased person’s assets in the following manner:
- Upon death, the surviving spouse can collect up to $30,000 from the bank by showing an affidavit executed by the spouse stating that the payment and all other payments received by the spouse from all institutions do not exceed $30,000.
- Thirty days after the death, the surviving spouse, child over 18 years of age, parent, sibling, niece or nephew (in that order of entitlement) or a creditor who paid funeral expenses can collect up to $15,000 from the bank by executing an affidavit, stating the death of death of the decedent, the relationship, that no fiduciary has qualified or been appointed, the names and addresses of the persons entitled to and who will receive the money paid, and that such payment and payments made do not exceed $15,000 in total.
- Six months after the death, a distributee or creditor can collect up to $5,000 (to the extent that the funds are not exempt from claims of other creditors) by executing another affidavit, stating the date of decedent’s death, that no fiduciary has qualified or been appointed, that decedent was not survived by a spouse or minor child, that affiant is entitled to payment, and that such payment and all other payments under the section does not in aggregate exceed $5,000.
Sometimes, banks are not used to seeing a small estates affidavit and would still require the issuance of letters of administration or letters testamentary in order for you to access the bank account, no matter how small. When this happens, you need to assert your rights, show the relevant statute (SCPA § 1310), and ask to speak to the supervisor, manager, or legal department.
In summary, not all bank accounts have to go through probate. Some bank accounts, such as those under a trust, those held jointly with rights of survivorship, or those with a payable on death designation of beneficiary, do not need to go through probate. In addition, if the gross value of the deceased’s estate is below $50,000, the bank account need not go through probate and the amount in the bank account can be withdrawn using a small estates affidavit.
If your loved one has died and you need assistance in handling the estate, an estate attorney like us can guide you through the process. If you are asking do bank accounts have to go through probate, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY, and Queens, NY. You can call us at 718-509-9774 or send us an email at email@example.com.