CA Estate Planning Blog

Tuesday, October 10, 2017

Joint Accounts and Your Estate Plan

How might joint accounts form a part of my estate plan?

A thorough and effective estate plan will involve many components.  Joint accounts and pay on death accounts can form a central part of any estate plan.  A joint account is a financial account held by more than one party.  Upon the death of one account holder, the assets held in a joint account will generally transfer to the other living account holders.  Our Irvine, California OC Wills and Trust attorneys explore multiple party financial accounts and how you might use such accounts as a part of your estate plan.  

Joint Accounts under California Law

In California, joint accounts held by parties that are married to each other will be presumed to be a community property asset, subject to community property laws.  As such, many married couples in California use joint accounts to deposit their savings and retirement funds.  Some parties will additionally add their children to joint accounts so that they can manage funds without the need of a power of attorney.

Under California law, while the spouses are alive, each account holder’s interest is based on his or her net contribution, which looks at how much each party deposits and withdraws.  When one joint account holder dies, absent evidence to the contrary, the deceased party’s share will be divided equally among surviving account holders.  

It is important that joint account holders understand what will happen to the assets held in the account in the event of their death.  For instance, parents that add children so that they can manage funds should know that the named children will likely become recipients of a portion of the funds if one parent dies.  Unlike other assets, the deceased party’s share in the account will not pass by the decedent’s will.  Rather, it will increase the original share of each surviving joint account holder.  When the last surviving account holder dies, only then will the account pass to those named in the deceased party’s will.  

Joint accounts can be an excellent way to pass assets to loved ones outside of the probate process.  Anyone with a joint account should understand the laws surrounding joint accounts upon death and plan accordingly to ensure their assets go to the intended party.


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