Does a Joint Account Avoid Probate? Rules, Risks & Alternatives

Yes, a joint account with rights of survivorship (e.g., “Joint Tenants with Rights of Survivorship” or JTWROS) typically avoids probate. When one owner dies, the surviving owner(s) automatically inherit the funds without court involvement.

Exceptions:

• If the account is structured as Tenants in Common (TIC), the deceased owner’s share goes through probate.
• Creditors or legal disputes can force probate intervention.
• If all owners die simultaneously, the account enters probate.

For most cases, joint accounts with survivorship rights bypass probate.

How Joint Accounts Work?

A joint account is owned by two or more people, typically with rights of survivorship. This means:

• When one owner dies, the surviving owner(s) automatically inherit the funds.
• The account bypasses probate and transfers directly to the co-owner(s).

Common Types of Joint Accounts:

1. Joint Tenants with Rights of Survivorship (JTWROS): Most common; avoids probate.
2. Tenants in Common (TIC): No survivorship rights—each owner’s share passes to their estate.
3. Community Property with Survivorship (CPWROS): For married couples in states like CA, TX, and WI.

When Joint Accounts Avoid Probate?

1. Rights of Survivorship Are Explicit:
   • The account must include “JTWROS” or similar language in the title or contract.
   • Example: “Jane Doe and John Doe, Joint Tenants with Rights of Survivorship.”
2. At Least One Owner Survives:
   • If all owners die simultaneously, the account becomes part of their estates and enters probate.
3. No Legal Challenges:
   • Heirs cannot successfully contest the account (e.g., claims of undue influence).

Exceptions: When Probate May Still Apply

1. Tenants in Common Accounts:
   • Each owner’s share becomes part of their estate and requires probate.
2. Creditor Claims:
   • Creditors can claim funds from a deceased owner’s share in some states (e.g., FL, OH).
3. Disputed Ownership:
   • If heirs argue the surviving owner was added fraudulently, the court may freeze the account.
4. Federal or State Taxes:
   • The IRS or state may place liens on joint accounts to settle unpaid taxes.

State-Specific Rules

• Florida: Joint accounts with rights of survivorship avoid probate (Fla. Stat. § 655.79), but creditors can claim funds for up to 2 years.
• California: Community property accounts (CPWROS) bypass probate for spouses (Cal. Probate Code § 5302).
• Texas: Joint accounts are presumed to have survivorship rights if created after 2009 (Tex. Estates Code § 439A).

Risks of Using Joint Accounts to Avoid Probate

1. Loss of Control: Adding a co-owner (e.g., a child) gives them immediate access to funds.
2. Creditor Exposure: The surviving owner’s creditors can seize the entire account.
3. Medicaid Penalties: Joint accounts may count as assets, affecting eligibility for benefits.
4. Family Disputes: Siblings may contest unequal inheritance if one child is a joint owner.

Related article for you:
Is There a Statute of Limitations on Probate? Critical Deadlines, Consequences & Legal Strategies

Better Alternatives to Joint Accounts

1. Payable-on-Death (POD) Accounts:
   • Name beneficiaries directly without granting account access during your lifetime.
2. Revocable Living Trusts:
   • Maintain control while alive; assets transfer privately at death.
3. Transfer-on-Death (TOD) Deeds:
   • Automatically transfer real estate to heirs without probate (available in 35+ states).

FAQs

Does a joint account override a will?

Yes. Joint accounts with survivorship rights transfer directly to the co-owner, regardless of the will’s terms.

Can a joint account be contested?

Yes. Heirs may claim undue influence if the account was added shortly before death.

Are joint accounts taxed when an owner dies?

No federal taxes, but some states (e.g., PA, NE) impose inheritance taxes on non-spousal transfers.

Steps to Set Up a Joint Account Properly

1. Confirm “rights of survivorship” are explicitly stated.
2. Avoid adding minors (they cannot control accounts until adulthood).
3. Update accounts after major life events (divorce, death of a co-owner).

When to Consult an Attorney

• You’re adding a non-spouse (e.g., a caregiver) to avoid probate.
• The estate has significant debts or complex assets.
• You anticipate disputes among heirs.

Key Takeaway

Joint accounts with rights of survivorship generally avoid probate, but they come with risks like creditor exposure and loss of control. For safer alternatives, consider POD accounts, trusts, or TOD deeds. Always formalize arrangements in writing and consult an estate planning attorney to align your strategy with state laws.

Need Help?

• Find a local attorney: American Academy of Estate Planning Attorneys
• Free probate guides: Nolo

By understanding these rules, you can protect your assets and ensure a smoother transition for your heirs.