Keep Your Bank Funds Out of Probate

If you want your money to pass directly to your beneficiaries, you should structure your bank accounts properly. By opening a joint account with rights of survivorship, or adding a payable on death designation to your account, you can keep your bank funds out of probate.

Typically, when you die, your assets (bank accounts, houses, personal possessions, etc.) are distributed according to your will. Probate is the process of collecting the deceased’s assets, paying any remaining debts they have, and distributing the assets to the named beneficiaries.

The process can be time-consuming and expensive:

• The executor must file the deceased’s will with the probate court (within a certain timeframe), so a judge can decide whether it is valid. 
• Each state or province has its own legal statutes regarding how a deceased’s estate must be probated. 
• The executor has to estimate the value of the estate as specified by the applicable tax code (such as the Internal Revenue Code).
• Most assets are subject to probate in the place where the decedent lived at the time of their death. However, probate for real estate needs to be administered in the place the real estate is located.
• The executor has to pay all taxes and pay off any debt owed by the deceased from the estate.
• The executor also has to pay estate taxes.
• Finally, the probate court judge will make a final ruling on the distribution of assets to beneficiaries.

As you can see, probate involves a variety of different laws and taxes. If you have lots of assets in a particular jurisdiction, it makes sense to make a will there. We, the Borderless Pair, have diversified our assets around the world — and in some cases the only asset we have in a country is a bank account. If you are only dealing with a single bank account, why not bypass the tedious probate process?

Joint bank accounts with rights of survivorship are recognized in lots of jurisdictions, including under the USA’s Uniform Probate Code. Be sure to do your own research to make sure it is a good option for you. They are a convenient way for account holders to manage their finances jointly and ensure a smooth transfer of funds when one of the account holders dies.

A joint bank account with rights of survivorship gives two (or more) account holders equal access to the funds in the account. When one dies, the funds are not subject to probate, but instead are transferred directly to the surviving account holder(s). For example, a parent co-owing an account with their adult child is an easy way to pass funds from parent to child outside of probate.

In some jurisdictions, joint bank accounts are presumed to have rights of survivorship unless otherwise specified. But in others, you need to include specific language in the account agreement or signature card showing clear and express intent to include rights of survivorship. When in doubt, clearly state your intentions. For example, some elderly people add a caretaker to their bank accounts as a convenience. They want the caretaker to assist with routine bill payments, shopping etc. but do not intend to make that person their beneficiary. You need to be clear that you want the joint account holder to be your beneficiary and receive all remaining funds when you die. 

Taxes are always a consideration — and once again we implore you to do your due diligence in your own jurisdiction. Adding someone to your bank account may result in tax obligations. 

For example, under Canada’s Income Tax Act, a “disposition” occurs when there is a change in ‘beneficial’ ownership of an asset. This means that when you add an adult child to your bank account, you, the parent, may need to pay capital gains tax. 

In the USA, a joint bank account with rights of survivorship could trigger a federal gift tax issue. According to the IRS, in 2025, a U.S. citizen can gift up to $19,000 per year tax-free, but anything higher may require them to file a gift tax return. If a parent adds their child as co-owner of their bank account, and the child makes a $25,000 withdrawal, they have in effect received a gift $6,000 above the annual tax exclusion.

If your tax situation works, and you clearly state survivorship language, a joint bank account with rights of survivorship may be the right vehicle for you. 

Most banks will allow you to add a payable on death, or transfer on death, designation to your account. You sign a document expressly naming one or more beneficiaries to receive funds from the account. 

If a bank account includes such a designation, the beneficiary simply needs to bring a death certificate to the financial institution, and the assets will be transferred immediately. You can avoid probate costs, because named beneficiary designations supersede your will.

Titling an account as transfer on death does not give a beneficiary access to the account until the account owner passes. Thus, there can be no confusion as to whether they were on the account for convenience vs. as a beneficiary. 

The options discussed above are ways to pass down funds without writing a will in every jurisdiction you bank in. There are benefits and disadvantages to each, and in some cases it may make more sense to go through probate. We recommend reaching out to legal and financial professionals to discuss your specific case. 

If you are looking for more banking content, check out our articles The Best Banks for Crypto Enthusiasts and Banking For Foreign-Owned U.S. Businesses.