Can Beneficiaries be named on bank accounts?

Beneficiaries can NOT be named on Bank Accounts

Recently, there have been several posts circulating advising persons to go into their banks and name a ‘Transfer on death- TOD’ OR ‘Payable on death-POD’ beneficiary on their Bank Accounts. Persons are advised that by doing this, they would relieve these beneficiaries from having to probate the deceased account holder’s estate in order to access funds from those accounts.

In Trinidad and Tobago however, our banks are NOT set up under trusts or specific legislation to enable naming of beneficiaries, whether minors or adults. (This does not include UTC and Credit Unions – neither of which are banks). WE THEREFORE DO NOT HAVE TOD OR POD ACCOUNTS AVAILABLE AT THE BANKS IN TRINIDAD AND TOBAGO.

Rather, the most commonoption available, to avoid probate in relation to Bank Accounts in Trinidad and Tobago, is to make the Bank Account JOINT with your “Intended Beneficiary” i.e the person whom you would like to inherit the funds held in the account.

• • This type of JOINT account would have to be an ‘and/or’ account where EITHER/ANY parties can sign or access the funds.

• • If it is set up as a JOINT ‘and’ account, where BOTH/ALL parties have to sign before funds can be accessed, then a grant of administration is still required by the bank on the death of ANY of the parties, before the other parties can access the funds in these ‘all parties have to sign’ types of joint accounts.

 

Did you know: There are downsides to joint bank accounts?

If you decide to make your bank accounts joint to avoid probate, based on last week’s post you know you would have to join the Intended Beneficiary in a capacity where ANY party can withdraw, deposit or sign on the account. The following factors are therefore important to consider:

• • Either person can withdraw or spend the money from the account — even if they weren’t the one to deposit the funds;

• • The bank makes no distinction between money deposited by one person or the other;

• • The money in the joint accounts belongs to both owners while they are alive; and

• • Once one party dies, the remaining joint account holder(s) own 100% of the funds. The estate/next of kin of the deceased holder inherits none of it, unless they were also the named joint holder.

Opening this type of joint account should only be considered with someone whom you trust, since that person will have equal control over the account’s funds.

If you like to keep your money private, then a joint bank account isn’t for you!