Overview

• Since property passing through probate courts typically takes longer to administer than nonprobated property, many individuals or their estates can avoid the probate process by planning accordingly. Furthermore, wills and property administered through probate courts may involve more legal expenses and reduces the amount of gross probate property available for distribution to heirs and beneficiaries. With payable on death accounts, banks distribute funds to remaining joint account holders when one joint account holder predeceases them. Some banks may also allow an individual account holder to name a nonaccount holder as the beneficiary to his savings or checking account when he dies.
  
  

Banking Laws

• Federal laws establish bank procedures that regulated banks must follow. With joint accounts, each account holder has an equal right to deposit funds, withdraw funds and become a sole owner of a joint account when the other account owner dies. Joint account holders have an unalienable right of survivorship. This means that one joint owner has the right to the entire bank account if he survives the other joint owner. Joint owners cannot separately designate their property to others by drafting wills naming unnamed third parties as beneficiaries. However, joint account holders may designate third parties as beneficiaries if they both die simultaneously or upon the death of a remaining account owner.
  
  

Limitations

• If two joint savings account owners die simultaneously, they can name a third party as a beneficiary to their account. For example, if husband and wife die in an auto accident, their named heir would have the right to their property. However, state laws may require the savings account to pass through probate court before a bank can distribute the proceeds from the saving account. In many states, payable on death provisions allow account holders to name third-party beneficiaries without probate.
  
  

Uniform Probate Code

• The Uniform Probate Court is not federal law but a drafting effort by the National Conference of Commissioners on Uniform State Laws and the American Bar Association's Probate Division to standardize state probate laws. Based on statistics compiled by the Cornell University Law School, as of 2011, about 18 states have adopted the Uniform Probate Code or parts of it. States that have adopted the Uniform Probate Code may have incorporated its provisions for payable on death accounts and their exemptions from state probate procedures.