Ownership of Bank Accounts
What happens if you are the owner of any bank accounts titled in your name only? You have to go through the Probate Court to authorize the release of the funds. It might cost your family members more money to chase after an account with a relatively small balance. Attorney fees, Probate Court fees, and other costs add up quickly. However, you can set up all of your bank accounts to transfer to beneficiaries upon your death.
Joint Bank Accounts
The phrase noted above in your name only becomes very important. If you are a co-owner of a bank account, the joint owner will have complete access to the bank account funds when you die. Both owners have equal access while each owners is alive. Ohio Revised Code § 1109.07 explains that money deposited into a joint account can be paid out to either named account owners. So if you have an account owned with a spouse or an adult child, the co-owner will continue to have access to bank funds when you die.
The “Payable on Death” (POD) Bank Account
Payable on Death bank accounts create an easy avenue to keep funds out of Probate. O.R.C. § 2131.10 states an individual can contract with a bank to make funds payable to a designated party upon death. This is a more secure way to avoid probate AND maintain control over the account while you are alive. The named beneficiary only has access to the funds upon your death. Also, you can change the named individual at any time.
The “In Trust For” (ITF) Bank Account
An “In Trust For” (ITF) bank account is not as common or as well known as the POD account. This account implies a trust relationship which creates an equitable interest for the designated party in the account. The owner acts as a trustee over the account and has no equitable ownership in the account. Therefore, the creditors of the trustee would not have a claim against the funds in this account. In Ohio the depositor simply makes a designation on the account signature card. O.R.C. § 1109.06 The designation states that (1) his/her intent is to create a revocable trust for the benefit of the designated party. The designation also states that (2) the balance of the account is paid to the designated party upon the death of the depositor.
A few minutes of planning today can relieve your loved ones from unnecessary delays and hassles down the road.