The Account Holder, the Thief, his Wife and her Lover

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I use the title of that very strange Peter Greenaway film to represent the confusing nature of account designations, which is what I will explain today.

In recent trip that our management and some of our staff made to Costa Rica, the subject of account ownership and inheritance was brought up. Members wondered what happened to their accounts if they died, who would get the money in a variety of scenarios.

It’s a good question, and I am here to talk about them.

Single-Owner Accounts

When you open your account at the Credit Union, it may just be you, alone. If you have nobody else on the account, no joint owner, and no beneficiaries (I will explain both of these designations next), and you die, there are two things that can happen.

If you die intestate, with no will, the money in your accounts will come to form part of your estate.

Your estate is a legal body, almost like a person, that represents everything you own and owe. When your estate is gathered, a person will be designated by Probate Court –a court specially designated in the legal system to manage and administer estates- to manage it, to pay off your debts, and divide your assets, money, and belongings among your descendants and family. Know that if you die without a will, the probate court from your jurisdiction (federal city, state or country, if you live outside the United States) will do things according to its laws. You should check your local jurisdiction if you wish to know how things might go in the event of your death.

If you leave a will or living trust, you will have designated an executor, and he or she will include your Credit Union accounts as part of your estate, to divide according to what you specified. If you were not specific enough, he or she will follow your local probate law.

Payable on Death Clauses

The Credit Unions allows you to set beneficiaries to your accounts so that they will inherit your funds at the time of your death. Whoever you designate will receive the funds, completely circumventing your will, even if you left one, as well as probate court.

But what if you state on your will that you want all your money to go to one or several specific people, and none of them are the beneficiaries that you listed on your Credit Union Payable on Death section? Well, that depends on the courts, if it goes to court. Legal experts tend to say that, if you don’t specify any account numbers in your will, probate judges tend to honor specific account designations. If the will uses actual account numbers, judges tend to check the date of the Payable on Death clause, and the date of the will and whichever is more recent tends to win the argument (that makes sense to me). But ultimately it’s up to the court to decide.

Joint Owners

Joint owners have, at the Credit Union, full and equal rights to the account as the member. Upon death of one of the joint account holders, the other member gains full ownership of the account and the account is renamed that way.

When one member wants to remove a joint owner from the account, can they do it? Not quite. In order for the Credit Union (or any financial institution) to remove an account holder from his or her account, the joint owner must agree in writing.

Click continue to read possible scenarios and solutions

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