No. As long as a joint bank account is set up normally, any remaining funds will automatically get moved to the other account holder— in fact, that’s a main benefit!
That being said, there could however be inheritance tax or income tax rules to keep in mind.
Most joint bank accounts include a right of survivorship. You may commonly see this referred to as 'JWROS', or 'joint with right of survivorship'. This just means that when one party on the account passes away, the full residual part of ownership is automatically transferred (or 'conveyed') to the surviving parties without having to formally pass the assets or account through probate.
Assuming this right of survivorship exists on the particular joint bank account in question, then the account will not be frozen. Instead, the remaining person(s) on the joint account will assume full ownership of the account.
This feature is a big reason why people open joint accounts, and they are sometimes informally referred to as a “poor man’s will” due to their ability to directly transfer to a surviving party (and avoid hefty legal bills or estate planning costs).
If you’re unsure whether the account is a joint account with proper right of survivorship, be sure to ask the bank. If they ask for a death certificate to prove that the person has passed, approach the executor for a copy or grab one from the local department of health if an original is needed.
If you believe you may be the intended executor but haven’t yet been appointed, (either because you were named in the will or because there was no will and you are the clear choice), then you will need to file the will with the appropriate probate court clerk (assuming a will exists).
How do joint accounts work?
Joint accounts allow one or more parties to have complete access to a specific bank account. They share deposits, withdrawals — everything. They are usually created between spouses or children, but being a family member isn’t required*.
Joint accounts are particularly useful to help certain assets avoid probate, but they also come in handy when someone is incapacitated or passes away because it allows the surviving party to easily pay any future bills.
One downside is that joint accounts can backfire if an account holder defaults on debt. The details depend on state laws, but generally speaking creditors of any owner have access to the account funds if a person can’t pay. This means if one owner messes up and can’t pay off a debt, all of the funds in the account could be forfeited.
What else to know when joint accounts become solely-owned after death
#1 You will be responsible for future taxes on the amount transferred to you
You are taking ownership of the funds and must also pay any associated taxes. While it won’t matter much for checking or savings accounts, this is particularly important for investment accounts*.
#2 If the total value of an individual's estate is larger than $12,060,000 (2022 threshold), then you may have to work with the executor to pay estate taxes*
Note, this is a different (and usually larger pool) from what is calculated as someone’s probate estate. General estate taxes take into account a wide net of anything someone owned at death, whereas a probate estate is the total value of the probate assets that must be legally transferred through the probate process.
The nuances of estate taxes vary by state. While most people will not have to worry about them since the threshold is so high, if you do, then you should absolutely hire a tax professional. They will be worth the cost.
#3 Joint account transfers can create legal battles.
Legal disputes commonly arise when debating whether the original holder intended for the assets in the joint account to pass to the other owner instead of being split between beneficiaries*. Things like capacity, timing, and amount of funds all play into the potential for a dispute.
#4 You may have to pay inheritance tax if you live in certain states (unless you are a spouse)
At the time of this writing, there are only six states that impose inheritance tax:
- Iowa
- Kentucky
- Maryland
- Nebraska
- New Jersey
- Pennsylvania
However, if you live in Iowa, you’re in luck because they are scheduled to eliminate the inheritance tax for any deaths after January 1, 2025*.
If you have to pay inheritance taxes on an asset you receive, rates normally begin in the single digits and can rise all the way up to 18%. The rate depends on the state you’re in, the value of the assets, and your relationship to the deceased (decedent). Generally, the closer you are to the decedent, the lower rate you will have to pay.
#5 Unless you cosigned on a certain debt, the money directly transferred to you will not be taken to pay off the deceased’s bills
Bills, debts, and taxes are paid by the estate’s probate estate — not anything that bypassed probate. Because joint accounts do not go through probate, they cannot be seized or used to pay off remaining estate debts.
The only time joint account funds will be used to pay off a debt after death is if you were also liable for that debt beforehand in some form or fashion.
The bottom line on joint bank accounts being frozen after death
The vast majority of bank accounts aren’t frozen after death. Assuming the account is set up like most joint accounts are, the account should have right of survivorship and full-ownership should transfer to the surviving account holder(s) without being subject to probate, but double check with your bank.
And if it was originally a joint bank account, but then one spouse passed away years past and now the other holder has passed, then it will likely be treated as a solely owned bank account and would be subject to probate because no mechanism was in place to directly transfer those funds to a beneficiary.
To go a bit deeper into debt and finances after death, read: What Happens & Who is Responsible if a Deceased Person Owes Taxes?
