Finance Definitions: Ownership Titles on Bank Accounts

Many people live with standard ownership titles to their bank accounts, like individual accounts or joint accounts. This is often perfect for the majority of account owners, but sometimes different kinds of bank accounts may fit your needs better than others. Let’s take a look at what each account entails.

Individual/Single

An individual or single bank account is rather simple. An individual person sets up an account in their name only, and only they can access the funds. This account is standard for those who are unmarried or do not wish for their spouse or significant other to access the account. Upon death, the account funds are held in estate until legal matters are settled.

Joint

A joint account is pretty simple as well. Two or more people set up an account for both to access. The funds belong entirely to both parties, and both can access all the money at any time. This account is often favored by married couples or other long-standing couples. Upon death of one or both of the co-owners, account funds are also held in estate (or frozen) as soon as the bank discovers the death. The executor of the estate (often the surviving spouse) must then determine what portion belongs to the estate and what portion belongs to the other co-owner.

Joint with Survivorship

Joint with survivorship accounts, however, automatically pass rights to the account directly to the surviving owner. The account is immediately accessible by the surviving owner, but the estate process may still determine that a portion of the funds belong to the estate (and can therefore be taxed).

Tenants in Common

Tenants in common accounts allow two or more people full access to an account while both owners are living, but when the owners set up the account, they agree on how much of the account each person owns upon the other’s death. When a death occurs, the account is divided as previously agreed. The remainder of the cash goes to the deceased person’s estate. This account is more common with business partners or people without close relationships.

Custodian for Minor

A custodian for minor account is one in which a person (the custodian) sets up an account for the purpose of gifting money to a minor. The minor cannot access the money until a certain age (of which is dependent on the state and/or the banking institution) unless the custodian changes the account to an individual or joint account. The custodian can access the money at any time on behalf of the child, but the money is legally the child’s as soon as it is deposited into the account. Custodians cannot change their minds and access the money for their own personal use.

Estate

Estate accounts are set up upon death by a surviving friend or family member. A death certificate is required, so they cannot be set up before death. After application for an estate account, the estate holds the funds while settling the estate. When all is settled, funds are distributed to parties as laid out in a will or to parties determined by the courts (if a will was not made).

Revocable Trust

On the other hand, to avoid the estate troubles, a revocable trust account can be established. This account identifies the beneficiaries who will receive the account funds upon death. Often, a full formal revocable trust document is drawn up to identify the recipients, but some accounts can simply name the beneficiaries at the bank.

That’s it; the run-down on most personal ownership titles on bank accounts. There are more account ownership titles available for other circumstances, particularly businesses, but for the average bear, these are the accounts to keep in mind.

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