Banking on Good Advice

Some of the most basic assets in an Estate can pass outside of the formal probate process. Survivorship rights on a typical bank account, for example, can be added with some boilerplate explanation and the check of a box. But what if you only intended to add a name to the account for convenience?

Check the box, and you’ve just made a significant estate planning decision, relying on the advice of an account manager, or worse, at your local bank. Upon your death, the other person gets the money. Is it really what you wanted? If that sense of foresight and accomplishment is fading, odds are it will soon be replaced by insecurity and doubt that you received sound advice and a decent explanation.

Obviously, the decision that the client makes (or doesn’t) carries some consequences, but let’s leave that decision for another discussion and focus on the advice they received. It certainly has some legal consequences. Litigation over multi-party bank accounts came to a head nearly twenty years ago when safe-harbor language was created to remove all doubt regarding the survivorship features of multi-party accounts. Today, financial institutions adhere to this safe-harbor approach. The language is found in our statutes and written, you guessed it, in a language that sometimes even lawyers barely understand.

In my experience, bank employees are some of the nicest, most professional people in the world, but I hardly want a headstrong young bank employee making vital legal distinctions any more than I want my mailman interpreting my x-rays. Call me cautionary, but the employee’s act of explaining the distinctions between “survivorship” and “convenience” features to their client seems dangerously close to the unlicensed practice of law.

Sharp bank employees should educate themselves, explain the distinctions thoroughly and refer the client to an attorney. Sharp clients should contact that attorney, understand the legal consequences of their decisions, make thoughtful and appropriate choices and enjoy the confidence that comes with an effective estate plan.