What Happens to a Joint Account When One Person Dies?

When a joint account holder passes away, the financial implications for the surviving individual vary depending on how the account was structured. Joint bank accounts allow multiple individuals to share access and ownership of funds. The death of one owner introduces questions about continued access, ownership transfer, and legal requirements. Understanding the specific type of joint ownership is important for navigating these circumstances.

Understanding Joint Account Ownership Types

The outcome for a joint bank account after an owner’s death depends on its legal framework. Three primary types of joint ownership are relevant: Joint Tenancy with Right of Survivorship (JTWROS), Tenancy in Common (TIC), and Tenancy by the Entirety (TBE). Each type dictates how the deceased’s share is handled.

Joint Tenancy with Right of Survivorship (JTWROS) is a common arrangement where co-owners equally share the account. Upon the death of one joint tenant, their interest automatically transfers to the surviving account holder(s) without the need for probate. Many joint accounts are set up with this right of survivorship by default.

Tenancy in Common (TIC) operates differently, as each owner holds a distinct share of the account. When a co-owner dies in a TIC arrangement, their share does not automatically pass to the surviving co-owner. Instead, the deceased owner’s portion becomes part of their estate. This share will then be distributed according to the deceased’s will or state intestacy laws, often requiring a probate process.

Tenancy by the Entirety (TBE) is a special form of joint ownership exclusively available to married couples in some states. Similar to JTWROS, TBE includes a right of survivorship, meaning the surviving spouse automatically receives full title to the account upon the death of the other spouse.

Joint Accounts with Survivorship Rights

Joint bank accounts established with survivorship rights, such as Joint Tenancy with Right of Survivorship (JTWROS) and Tenancy by the Entirety (TBE), allow for automatic transfer of ownership upon an owner’s death. When an owner passes away, the funds automatically become the property of the surviving co-owner. This transfer occurs outside of the probate process.

This structure allows the surviving account holder to maintain continuous access to the account’s funds. Financial institutions require notification of the death and presentation of a certified copy of the death certificate. Once the bank verifies the documentation, the deceased person’s name is removed, and the surviving owner gains full legal control.

The surviving owner does not need a court order to access the funds. This direct transfer helps the individual manage financial obligations without delays. Reporting the death to the financial institution with documentation is a required step to update account records.

Joint Accounts Without Survivorship Rights

When a joint account is structured as Tenancy in Common (TIC), the deceased owner’s share does not automatically transfer to the surviving account holder. In a TIC arrangement, that portion of the funds becomes part of the deceased’s estate. The surviving co-owner retains their share, but the deceased’s share is subject to estate administration.

The deceased’s share will need to go through the probate process. During probate, a court oversees the distribution of assets according to the deceased’s will or state intestacy laws. This legal process can be time-consuming and may delay the distribution of the deceased’s portion of the account.

Financial institutions may freeze the deceased’s portion of the funds, or even the entire account, once they are notified of the death. This freeze remains in place until legal authority, such as letters testamentary from an executor or letters of administration from a court-appointed administrator, is established. The surviving account holder will not have immediate access to the deceased’s share until the probate process is complete and proper legal documentation is provided to the bank.

Actions for the Surviving Account Holder

After the death of a joint account holder, the surviving individual needs to take steps to manage the account. Obtain several certified copies of the deceased’s death certificate. These copies are necessary as financial institutions and other entities will require official proof of death.

Next, notify the financial institution where the joint account is held. The bank will request a certified death certificate along with the surviving account holder’s identification. This initiates the bank’s process for handling the account according to its ownership type.

For accounts with survivorship rights, the bank will process the change in title, removing the deceased’s name and transferring full ownership to the survivor. For accounts without survivorship rights, the bank will require court-issued documents, such as Letters Testamentary or Letters of Administration, to release the deceased’s share to the estate’s legal representative. Interest earned on the account may have tax implications. The financial institution will issue a Form 1099-INT, and the surviving owner or the estate will be responsible for reporting this income on tax returns.