Fundamentals of Texas Multiple-Party Accounts

Abstract

Multiple-party accounts, such as checking accounts, savings accounts, and certificates of deposit, are contractual arrangements for the deposit of money with financial institutions such as state or national banks, savings and loan associations, and credit unions. The disposition of the funds remaining in these accounts upon the death of one of the depositors depends on the type of account, the account contract, and the applicable state law.Multiple-party accounts are important non-probate transfer mechanisms because these accounts are used widely, easy to understand, and inexpensive to obtain. This article discusses the four commonly recognized types of multiple-party accounts: (1) the joint account, which may transfer ownership rights to the account’s balance to the surviving party; (2) the agency or convenience account, which does not transfer the account’s balance upon the death of one of the parties; (3) the payable on death account, which causes the balance to belong to the surviving pay on death payees upon the death of the depositors; and (4) the trust account, under which the beneficiaries receive the account’s balance upon outliving all trustees.