Bank Accounts: Jointly Owned vs. Payable on Death
Jointly Owned Bank Account
A Jointly Owned bank account is an account that is shared by two or more parties with the full rights of the account being transferred to the remaining parties when one of the account holders dies. All parties have full use of the bank account with no restrictions. Once one of the parties passes, the account remains in the other parties’ names and is not distributed to the heirs of the deceased.
Payable on Death Accounts
A Payable on Death (POD) bank account has one or more parties that control said account. When the owner of the account passes, their ownership then passes to the beneficiary of the account. If the beneficiary is not a joint owner of the account, they do not gain full access to the account until after the owner dies.
Both a Jointly Owned bank account and a Payable on Death account are able to avoid probate in most instances. If a Jointly Owned account holder dies and then the remaining holder dies, the account would then need to be distributed according through probate proceedings. The same goes for a Payable on Death account if the beneficiary predeceases the account holder, the account would then be distributed per the probate laws of the state in which you live.