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- How to Transfer a Traditional IRA From One Spouse to Another After Death
- Death & Joint Savings Accounts
- Can I Roll the Money in a Health Savings Account Over Into an IRA?
Before heirs receive assets when someone dies, such as the money in savings accounts, the ownership of those assets must be transferred. The procedure for transferring a savings account depends on how the original owner set up the account. In some cases it’s a simple process. In others, the savings account may be tied up in a lengthy probate process.
A savings account may be held jointly, and the owners have right of survivorship. Ownership of the entire account passes to the survivor or survivors on the death an owner. Typically, spouses or parents and children hold savings accounts jointly. As a surviving owner, you can withdraw money from the account. To keep everything straight, it’s best to contact the bank or credit union and have the title cleared. The bank will need a certified copy of the death certificate or other proof of death.
The sole owner of a savings account can arrange with the bank to name a beneficiary by completing a “Payable on Death” form. The named beneficiary has no claim on the account while the owner is alive. If the owner passes away, the account automatically passes to the beneficiary without the need for probate. The account beneficiary will need to provide the bank with a certified copy of the death certificate. The bank then transfers title to the account to the beneficiary.
When there is no designated beneficiary or joint owner of a savings account, it must go through probate. The probate court reviews the will and other records to determine who is entitled to get the money in the savings account. The executor of the estate, not the beneficiary, transfers ownership of the account. The probate court provides a letter authorizing the executor to act on behalf of the deceased. The executor then submits to the bank this letter, a copy of the death certificate, and either a copy of the will or a letter from the probate court stating which heir gets the savings account. The bank then processes the transfer of ownership.
In many cases an heir knows he will inherit the money in a savings account. If you are such an heir, you should refrain from taking any of the money out until ownership is transferred to you. You should also consult with the executor of the estate regarding estate taxes. You will not owe taxes on the money, but if the estate is large enough to be subject to state or federal estate taxes, the estate must pay those first, with the remainder going to the heirs.