How to Avoid Probate on Bank Accounts in New York

Probate is the court-supervised process of distributing a deceased person’s assets, but it can be time-consuming and costly. If you’re looking for ways of how to avoid probate, especially for bank accounts, there are effective strategies that can help. Payable-on-death (POD) designations and joint titling of assets are just two of these strategies. These options allow funds to pass directly to your chosen beneficiary without the delays and expenses of probate. 

This blog post will discuss ways to avoid probate on bank accounts by reclassifying probate assets into non-probate assets and how an experienced estate planning attorney can assist you.

What Is Probate?

Probate is the legal process of settling a deceased person’s estate, ensuring payment of their debts and distribution of their assets according to their will (or state law if no will exists). It typically involves:

• Validating the will in court, 
• Appointing an executor or administrator to oversee the process, 
• Identifying and inventorying the deceased’s assets, 
• Paying outstanding debts and taxes, and 
• Distributing remaining property to beneficiaries.

While probate is sometimes necessary to provide oversight, it can result in unnecessary expense and delay. However, some assets, like those held in trusts, joint bank accounts, or bank accounts with named beneficiaries, may bypass probate entirely.

Why Avoiding Probate Matters

Probate often involves legal fees, court costs, and delays that can tie up your loved ones’ access to your assets for months or even years. Avoiding probate can save your beneficiaries time and stress while preserving your estate’s value. Bank accounts are a common focus of probate avoidance because they are critical for:

• Covering funeral costs, 
• Paying ongoing bills, and 
• Addressing immediate expenses after death. 

Taking the proper steps to make your accounts probate-proof ensures that funds remain accessible when your loved ones need them most, reducing the financial and emotional burdens during an already difficult time.

Establishing Payable-on-Death (POD) Designations

One of the most effective ways to avoid probate on bank accounts is by setting up a POD designation. This option allows you to name a beneficiary who will receive the funds in the account after your death while keeping it out of probate.

To establish a POD account, contact your bank or financial institution and complete their form naming the individual or individuals you want to inherit the account. Once the account holder passes away, the named beneficiary can access the funds by providing a death certificate and proof of identity. 

It’s essential to regularly review and update your POD designations, especially after significant life events like marriage, divorce, or childbirth. Keeping these details current ensures your assets go to the intended recipient without complications.

Titling Accounts Jointly

Another option for avoiding probate is titling bank accounts jointly with rights of survivorship. When two or more people hold a joint account, the surviving owner automatically takes full ownership upon the other owner’s death. This transfer happens outside probate, making it a convenient solution for many families.

However, joint ownership comes with risks. The co-owner has full access to the funds during your lifetime, leading to potential misuse. Additionally, a co-owner’s creditors may attempt to seize funds in the account to satisfy debts. Because of these risks, it’s essential to carefully consider whether joint ownership is the right solution for your estate planning needs.

The Role of Trusts in Avoiding Probate

A trust may be a better solution to managing significant assets or wanting more control over the distribution of your bank accounts. Creating a revocable living trust allows you to:

• Transfer accounts into the trust and name beneficiaries to receive funds after your death;
• Retain complete control and access to the accounts during your lifetime as the trustee; 
• Permit a successor trustee to distribute funds to your beneficiaries according to your wishes after your passing; and
• Avoid the probate process entirely, thereby providing privacy to your family. 

Trusts can be more complex to establish and manage but offer flexibility and protection that other probate-avoidance strategies cannot. Consulting an estate planning attorney ensures your trust is drafted correctly and meets your goals.

Does a Will Avoid Probate?

You might wonder, Does a will avoid probate? While a will is an important estate planning tool, it does not bypass the probate process. Instead, it is a legal document instructing how to divide your estate. The court still oversees this process, and its involvement can result in delays and additional costs.

To ensure your bank accounts bypass probate, combine a will with other estate planning tools, such as POD designations, trusts, or joint ownership. While a will remains an essential part of your overall estate plan, it should not be your sole method for transferring assets efficiently.

Reviewing and Updating Your Estate Plan

Avoiding probate requires more than setting up an estate plan—it requires ongoing attention. Regularly reviewing your accounts, designations, and documents ensures they reflect your current wishes and comply with any changes in New York law.

For example, if you’ve moved, divorced, or added new beneficiaries, failing to update your estate plan could lead to disputes or unintended consequences. Reviewing your plan every three to five years or after any significant life change helps avoid these issues. Working with an estate planning attorney provides additional peace of mind, ensuring that all aspects of your plan are legally sound and up-to-date.

Learn More About How to Avoid Probate by Speaking with an Experienced Attorney 

At the Law Office of Andrew M. Lamkin, P.C., we have extensive experience helping clients create estate plans they can rely on. We take pride in helping families from all walks of life obtain certainty about their future so they can spend their time doing what they love and not worrying about whether their affairs are in order. Call the Law Office of Andrew M. Lamkin, P.C. today to learn more and schedule a free consultation. You can also connect with us through our secure online contact form.

Andrew Lamkin

Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.

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