Four Ways You Can Allow Others to Access Your Bank Accounts


Whenever I meet with a client for the first time, we usually will talk about how their bank accounts are owned and who has access to the client’s bank accounts both during their lifetime and upon their passing. Many times, there is general confusion as to how bank accounts are owned (either jointly or individually) and whether bank accounts have named beneficiaries or not.


Here are four ways you can give someone access to your bank accounts along with the pros and cons of each method.


#1. Make Your Bank Account a “Payable on Death” or “POD” Account

You can designate a beneficiary or multiple beneficiaries on your checking, savings, money market or certificate of deposit accounts. When you name a beneficiary for a bank account, that account is now called a “Payable on Death” account or a “POD” account. You work directly with your Bank to name beneficiaries for your Bank accounts.


When a beneficiary is named on a bank account and the account owner dies, then the money in that account will easily transfer to the named beneficiaries. This is a much easier process than having to transfer those bank account funds through the Probate Process.


Most people DO NOT have named beneficiaries for their bank accounts, mostly because people do not know that they CAN name beneficiaries for their Bank Accounts. (For some reason, banks generally don’t educate their customers about this option.)


Pro: The main advantage is easy access after death. By naming beneficiaries on your bank account, this account will now be guaranteed to Avoid Probate, and your beneficiary will have quick access to cash upon your death.

Con: When you name someone as a beneficiary of your bank account they DO NOT have ownership interest or rights to access the account while you are living. If you need them to help you pay bills while you are still living but incapacitated – a POD designation will not help with that.


Warning 1: Many people name one of more of their adult children as beneficiaries of a bank account so their children can use that money to pay for funeral expenses or other expenses of their estate. While it is true that a beneficiary can turn around and use the money to pay bills of your estate, remember this money is now legally “their money” and they could spend it on whatever they choose. You are trusting that your named beneficiary will use the money to pay bills of your estate if this is your intention.


Warning 2: If you intend for your Beneficiary of a bank account to pay the bills of your estate and then divide the rest of the money among your other children, then that money that has been transferred to your Beneficiary via a POD account is “their” money from an IRS perspective. If your Beneficiary gives more than $16,000 (as of 2022) of that money to anyone else, that is considered a “gift” from the named beneficiary’s estate to that other person and – the named beneficiary would have to report that “gift” to the IRS for that tax year.


#2. Make Someone a “Joint Owner” of your Account

You can make a someone a Joint Owner of any of your bank accounts while you are living. Any joint owner of a bank account has complete access and rights to the account while you are living and after your death.


Pro: Full Access during your lifetime and after your passing. This person will have full access to the account while you are living and could use these funds to pay your bills upon your behalf. Upon your death they continue to have complete access to the account without having to fill out any additional paperwork.


Con: As a joint owner, if this person has creditor issues and/or judgments entered against them, their creditors could access the money in this joint account to pay off the debt owed. Also, as a “joint owner”, this person could take all the money and use it on themselves without paying your bills.