Using joint accounts and beneficiary designations in Arizona can often create unintended consequences. This guide discusses some of the issues.
What could go wrong if I list someone else as a joint account holder on a bank account in Arizona?
A trusted loved one or friend is often added as a signer to bank accounts. While both joint account holders are alive, ownership is determined by the proportionate net contribution to the account. A.R.S. ? 14-6211(A). However, in practice, a joint account holder can withdraw all the funds without notifying the bank of another account holder's passing away and the bank will not be liable. A.R.S. ? 14-6226(A). In contrast, an agent under a power of attorney has clear penalties under Arizona law if the agent misuses the account funds.
What happens under Arizona law if a bank account does not have a designation?
If a bank account does not have a designation, the portion of the bank account that belongs to one account holder should be part of that person's estate.
What is the difference between a POD (pay on death designation) and a ROS (right of survivorship) designation?
You can provide for what happens to funds in a bank account by adding: (1) a pay on death designation, often referred to as POD; or, (2) add a right of survivorship designation. A beneficiary of a pay on death designation does not have any right to sums on deposit during the account holder's lifetime. A.R.S. ? 14-6211(B). A pay on death designation directs the bank to give your account to the designated beneficiary upon proof of your death (usually, a certified death certificate). A right of survivorship designation converts a normal joint bank account to one that pays the funds to the second account holder surviving the death of the first account holder.
Under Arizona law, does a person's will override a pay on death designation or a right of survivorship designation?
Both pay on death and right of survivorship designations control over what your will or trust says--under Arizona law, a will only controls probate property, and these designations make the bank account non-probate property. This problem also arises with designations on IRA accounts.
Do bank officers understand the differences between a pay on death designation and a right of survivorship designation?
Few bank officers really understand what pay on death and right of survivorship designations mean. When bank officers set up a joint account, it is often done incorrectly and conflicts with the person's estate plan.
What is the best practice to add someone to my bank account?
The best practice under Arizona law is to have an agent under a power of attorney as a signer on an account.
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