Elder Law Report
Elder Law Report
Death, Taxes, and Bank Accounts: The Surprising Truth Your Banker Won't Tell You
What happens to your bank accounts when you die? It's a deceptively complex question that goes far beyond the surface-level solution of "just add a beneficiary." In this eye-opening conversation, attorneys Greg and Jordan McIntyre unpack the hidden dangers lurking in common estate planning strategies that could leave your hard-earned assets vulnerable.
The father-son legal team dismantles the popular misconception that joint ownership with rights of survivorship provides foolproof asset transfer. As they reveal, this approach can unexpectedly expose your accounts to creditor claims during probate—a risk many financial advisors never mention. They offer a smarter alternative: utilizing power of attorney relationships while maintaining beneficiary designations, providing management capabilities without the liability exposure.
But the discussion goes deeper, addressing the elephant in the room that basic estate planning often ignores: long-term care needs. With 70% of Americans over 65 requiring some form of long-term care during their lifetime, the McIntyres explain why simple beneficiary designations fail to protect your assets when they're most vulnerable. They introduce specialized trust strategies that maintain your access to funds while shielding them from catastrophic care costs.
The attorneys also raise important questions about the readiness of beneficiaries to receive inheritances and how trusts can provide structure and protection for younger heirs. Their holistic approach emphasizes that true estate planning prioritizes your needs while living, not just asset distribution after death.
Ready to gain clarity on protecting your financial legacy? Schedule a free consultation with McIntyre Elder Law by calling 1-888-999-6600 or visiting mcintyrederlaw.com/scheduling. Your financial security deserves more than a simplistic solution.
Hi, I'm Greg McIntyre at McIntyre Elder Law. This is the Elder Law Report and today our subject is how do you pass a bank account or bank accounts if someone passes away or if you die? How do you pass along your bank accounts? Then you can talk about how do you pass along investment accounts, like stock accounts, things like that, and the answer may seem straightforward, but it's not, and I'll tell you why and I'll tell you where your pitfalls are, depending on what you choose To assist me today or to lead me, I don't know one or the other. I am very proud to introduce on this Elder Law Report once again my son, fellow attorney and associate in our firm, jordan McIntyre. Hey, jordan,
Greg McIntyre:hey, Dad, I'm attorney Jordan McIntyre with McIntyre Elder
Greg McIntyre:Law. You are, you are hey. So, jordan, hey, you've met with a ton of clients. You know the law surrounding this. What's a straightforward way that you can pass a bank account, let's say my checking savings account, maybe I have an investment account at a bank, stock in it or something. How can I pass those accounts to my children if I die? Easiest way is to name beneficiaries on those accounts so you could name payable on death. Or investment accounts will have what's called transferable on death, pod or TOD on the accounts. That's an easy, straightforward way to pass it right? I think so, and you would think the answer would stop there. But wait, there's more. There's a couple of stages of this and I'll tell you where there's liability in a couple of areas and I'll tell you what I prefer, based on my experience and advice. Okay, how about just based on my experience? And again, disclaimer, I'm not your attorney, unless you actually hire me, okay, but I am a licensed attorney in the state of North Carolina with a lot of experience around this. So let's say that's the easy answer. Hey, we're just going to put beneficiaries on this, all right. Also, I hear all the time with husband and wife, for example, or a parent and a child. Hey, I put it as us, as joint owners with rights to survivorship. Jordan, in your consultations, do you see that regularly? I do, okay. So what do you know? A pitfall of joint owners with rights to survivorship? Because I do. I think you're going to tell us. I'm going to tell you, okay, a pitfall of joint owners of rights to survivorship, and why it's not. The thing that I prefer is a joint owner with rights to survivorship account, a bank account, an investment account is subject to claims of creditors if a probate estate is opened in North Carolina. And here's why If you look at an application for a probate estate, at the very top in the accounting part you list all your joint owner with rights to survivorship
Greg McIntyre:accounts.
Greg McIntyre:about the accounts that the decedent held? Why? Why would you have to put those on a probate estate filing if they passed automatically outside the probate estate? Why would you do that? Why would you have to do that? Do you know, jordan?
Greg McIntyre:I think they're still subject to any type of claims right. They're not the first pot of money or assets that are subject to claims, the assets that are going through the probate estate, because, remember, those are beneficiary accounts if they have PODs or TODs which pass outside of probate, or their joint owner with rights to survivorship account which pass outside of probate. But what it is is, if there's claims that come in, the probate is stayed Okay and the money and assets flowing through the probate estate are not enough to satisfy those claims, that is a secondary source, a secondary place where the court makes the executor or administrator personal representative, the person who's over the estate, makes them go to collect that money to supplement the assets in the estate to pay the claims. So really, what you're doing by putting joint owners rights survivorship on accounts, is potentially subjecting those accounts to the claims of creditors in a probate matter, even though they pass outside the probate estate. So that's your danger and liability there. Made a mistake? So that's your danger and liability there. I prefer to see an agent under a power of attorney, a general, durable power of attorney, for you to get on an account that way for a sibling, a parent, anyone you're helping and assisting with managing affairs. That makes you their agent. They have the ability to name you the agent and then you operate the account and help them and then you could still be the payable on death beneficiary, but you're not a joint owner with rights to survivorship. Therefore not subjecting that account to the potential claims of creditors in a probate matter. That's an end around that and that's what I prefer and that's what I recommend to my clients.
Greg McIntyre:Also, asking how to pass bank accounts outside of probate is not a simple and straightforward question, because I need to know more. To answer the question adequately, I need to know what is your healthcare situation. Do you have long-term care insurance. What's the value of your liquid assets? How much money do you have that you can allocate to paying toward long-term care if you need it? The reason that's so important to me, and it should be to you, is that there's a 70% chance that everyone over the age of 65 in America right now is going to need some type of long-term care during their life. There's in-home assisted living or nursing home care and that's a huge percentage. I told you there was a 70% chance that, I don't know, something was going to happen to you. You'd probably be inclined to take action.
Greg McIntyre:So simply placing a beneficiary on a bank account or an investment account, that's still your asset. It's not protected inside of a trust like a convertible trust or an irrevocable trust. Let's say it's a specialized irrevocable trust, a Medicaid asset protection trust. You could place it there and still have the use and benefit of it and then be able to shut the safe door and protect it, and then it's not considered your asset in an application for a benefit to pay for long-term care. That might be a wiser strategy, given the 70% chance or likelihood of needing long-term care if you're over 65. So you have to understand that. Just avoiding probate and avoiding claims of creditors, including a benefit, doesn't help you qualify for the benefit itself. It doesn't in any way get that off the books for you or help you protect that account. It just makes it easier to pass along if you die.
Greg McIntyre:And then there's other considerations and thoughts. Okay, how much money is that? What do you want to do with that money? Are you leaving that money to a young person? Should that money be set aside, say in a trust, to pay for a collar and then maybe give it out over time to help grandchildren, instead of curse them with a lot of money at a young age?
Greg McIntyre:All these and more considerations go into a consult when you sit down with an estate planning or elder law attorney, or you sit down with myself, or I would say, many may, but he's bigger than me, he's a lot taller than me. He's still the master. No, no, yes, but he's still the master, no, no. Look, I'm so proud to be able to work with you, jordy, me too, and you know, if you want to sit down with myself, jordan, or one of our very, very educated, learned and experienced estate planning and elder law attorneys and talk about the best way to pass your assets I'm even more concerned about you while you're alive, and I say that all the time. So that's really where you need to focus. How am I going to take care of myself, not have my assets frozen if something happens to me, be able to pay for long-term care?
Greg McIntyre:And then the next part is hey, once we've got that squared away, how are we going to let what we've worked hard for during our lives help our families if we pass away? So we'd love to offer a free consultation to you and your family to sit down and discuss these things and get clear on them. Clarity is king. That's my number one thing, and I would love to help you reach clarity in these things in your life. You can exercise that free consult by calling 1-888-999-6600 or by going online and scheduling directly on our calendars at mcelderlawcom slash scheduling. That's mcelderlawcom slash scheduling. And thank you and Gordon, thank you. I appreciate you doing this. Yeah, come see me in Shelby, come see me in Charlotte. See you guys.