When it comes to estate planning, how financial accounts are titled (aka “styled”) can make a significant difference in what happens after a person’s death. Proper account styling ensures assets are transferred as intended at death, and helps avoid probate where possible. Incorrect or inconsistent titling, on the other hand, can override even the most carefully drafted will or trust, direct assets to the wrong individuals, or cause family disputes during estate settlement. This article provides an overview of some of the most common account styles one may come across when preparing their own estate plan, or administering the estate of a loved one.
Common Account Styles:
Joint Tenancy with Right of Survivorship (JTWROS): JTWROS is an express way to title an account where two or more people own and operate it. Its key feature is when one owner passes away, their share of the account automatically transfers to the surviving owner(s). Typically, the surviving owner contacts the bank, brokerage, or custodian holding the account with a certified copy of the deceased owner’s death certificate, and the institution removes the deceased owner’s name. The surviving owner becomes the sole account holder, with full control and access. But remember, the JTWROS styling overrides the deceased owner’s Will. Therefore, for someone who does not intend that the joint account holder inherit the entire account, or where trust planning is being incorporated, this styling is not the right fit.
Payable on Death (POD) / Transfer on Death (TOD): POD/TOD designations are simple ways to pass assets directly to a named beneficiary without going through probate. POD is typically used for bank accounts, while TOD generally applies to investment accounts and securities; however, these are essentially interchangeable terms. The key difference with JTWROS is that the beneficiary of a POD/TOD account has no ownership or account management rights while the account holder is alive. The beneficiary only inherits the account upon the owner’s death. POD/TOD is often used when someone wants to retain full control during life but desires the simplicity of a complete and outright non-probate transfer after death.
Tenancy in Common (TIC): In Texas, survivorship rights with another person must be clearly specified in an agreement with the financial institution to be valid. As a result, accounts between spouses are typically held as TIC accounts, unless the account indicates otherwise. This can be quite misleading, as banks, contrary to Texas law, might assume that the account includes survivorship rights. TIC accounts allow each person’s share of the account to remain part of their individual estate and not automatically pass to the surviving account holder upon death. This arrangement is especially important in estate plans involving spousal trusts for tax purposes, second marriages, or when spouses want their share to go to children or other heirs.
Individual Account: Many married clients assume that if an account is titled in one spouse’s name alone, it’s automatically separate property. Not so fast. Under Texas law, title alone doesn’t determine ownership. What matters is how and when the asset was acquired. If an individual account was funded during the marriage using wages or other community income, it’s likely community property, even if only one spouse’s name appears on the account. This mischaracterization can lead to confusion, especially during estate planning or probate. For example, even if an account is titled solely in the surviving spouse’s name, the deceased spouse may own a one-half community interest and can direct their half of the account to children or others outside the marriage.
Convenience Account: This type of bank account is useful when the primary owner desires to add another person simply to help manage the account. The added person can write checks, pay bills, and access funds for the owner’s benefit, but they have no ownership rights and no survivorship interest. When the owner dies, the account becomes part of their estate and does not pass automatically to the convenience signer. Using a convenience account can help avoid an unintended inheritance and keeps the account aligned with the owner’s will or trust.
Account in Trust: When an account is titled in the name of a trust, it is no longer owned by the individual but by the trust itself. The trustee manages the account for the benefit of the trust’s beneficiaries, according to the terms of the trust document. Most importantly, a trust only becomes effective with assets properly titled in its name. Failing to properly retitle assets into the trust means those assets will be governed by your Will (or the account styling), not by the trust terms.
Conclusion:
Account styling and survivorship rights are central to the modern estate plan. Their influence on probate, tax planning objectives, asset control, and meeting family goals is significant. Aligning account titling and beneficiary designations with the overall estate plan is essential, not optional. Failing to do so can lead to family conflicts, legal disputes, higher taxes, delays, or even accidental disinheritance.