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When it comes to managing your finances, especially in the context of estate planning, understanding your options for bank account ownership is essential. Whether preparing for the future or managing your everyday finances, knowing the difference between joint ownership and being an authorized signer is important. Both have different implications for control, access, and what happens to your money when you pass away. Let’s break down the key distinctions and how they play a role in your estate planning strategy.
What is Joint Ownership?
Joint ownership means that two or more individuals legally share a bank account. This gives each party equal access and responsibility over the account. At Western Bank, a trusted West Texas community bank, joint accounts are commonly used by spouses, business partners, and family members.
There are a few types of joint ownership, but the most common is Joint Tenants with Right of Survivorship (JTWROS). When one owner dies, their account share automatically transfers to the surviving joint owner(s). It’s a seamless transfer that avoids probate, which is why joint ownership often comes up in estate planning.
However, it’s important to remember that each owner has equal authority. Any joint owner can withdraw funds, write checks, or even close the account without the other’s permission. This level of access requires a high level of trust between all parties.
What is an Authorized Signer?
An authorized signer is someone who has been given permission to access and manage a bank account but does not have ownership rights. In essence, they act on behalf of the account owner but have no legal claim to the funds within the account. This role is often used in both personal and business banking situations.
At Western Bank, you might designate an authorized signer to help pay bills or manage day-to-day finances. While this person can deposit and withdraw money, they cannot claim the funds in the account as their own or receive the funds if the account owner passes away.
How & When Joint Ownership Surfaces in Estate Planning
Joint ownership can be a strategic tool in estate planning, especially when the goal is to simplify asset transfer after death. Since joint accounts with survivorship rights bypass probate, they offer a straightforward way to ensure a loved one has immediate access to funds.
However, using joint ownership as a substitute for a formal estate plan can be risky. Adding someone to your account as a joint owner gives them full access to your money. Your assets could be at risk if they encounter legal or financial troubles such as divorce, debt, or lawsuits.
Residents considering estate planning should speak with an attorney or estate planning professional to weigh the benefits and drawbacks of joint ownership.
Being an Authorized Signer Is Not Joint Ownership
It’s a common misconception that being an authorized signer is the same as being a joint owner. They’re vastly different in terms of legal standing. Certain sources state that an authorized signer has no legal rights to the account holder’s funds upon the account holder’s death.
If you intend to give someone access to help manage the account without giving them ownership, making them an authorized signer is the better choice. However, if you aim to ensure that the person inherits the funds after your passing, joint ownership (or other estate planning tools) may be more appropriate.
How to Choose Which Plan Is Best for You
Deciding between joint ownership and an authorized signer depends on what you want the account to accomplish—now and in the future.
If your goal is to share ownership of a bank account—giving another person equal control and long-term access—joint ownership is likely the better fit. This setup allows both parties to deposit, withdraw, and manage the funds anytime. It’s ideal for married couples, aging parents, and adult children, or anyone planning for seamless access in the event of illness or death. Importantly, joint accounts with rights of survivorship automatically transfer ownership to the surviving account holder, making them a common feature in estate planning.
On the other hand, if your goal is to delegate financial tasks without giving up ownership, designating an authorized signer may be the smarter move. This option allows someone to help manage your finances, like paying bills or handling transactions, while keeping the account and its contents legally in your name. It’s beneficial if you’re temporarily unavailable, traveling, or need help managing daily financial responsibilities, without impacting your estate plans or putting the account at risk if the signer faces legal or financial issues.
Ask yourself:
- Do I want someone to help manage my account, or co-own it?
- Should this person have access to the funds after I pass away, or not?
- Am I planning for convenience now, or legacy and inheritance later?
Understanding what each option does for you will help ensure your decision aligns with your personal goals, financial needs, and overall estate planning strategy.
Planning For The Future
Choosing between joint ownership and authorized signer is more than a matter of convenience; it’s a significant decision regarding your bank account ownership options and overall estate planning. At Western Bank, a leading West Texas bank, we’re here to help guide you through these important decisions with clarity and care.
Whether you’re opening a joint bank account with a loved one or adding an authorized signer for easier access, we’ll ensure your choices align with your personal and financial goals. Take the next step in securing your future. Contact Western Bank today, your trusted partner for estate planning and personalized banking solutions.
