17 Jun What happens to a bank account owned by two people when one dies?

Q. I was surprised to read about how banks treat joint accounts not so jointly: one tenant is primary, the other secondary. Is this always the case? Does it only apply to New Jersey-based banks, as opposed to, say, online banks? Can it be avoided by each tenant, assuming they have held separate accounts before they married or otherwise joined their finances, by closing their individual accounts and opening a joint account simultaneously? I met my fiancé in Vietnam, and when we got married here, I added him to my existing bank accounts as JTWROS.
— Confused

A. Thank you for your question.

It’s important to understand how these accounts are treated.

JWTROS means joint tenancy with right of survivorship.

An account that is opened as JTWROS is a type of account that has at least two owners, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

“Assuming that the reader’s spouse submitted paperwork that was approved by the bank, although a bank may identify one of the owners as primary, all co-owners of the account have the right to make withdrawals and deposits and can also manage the account,” she said. “When one of the owners dies, the other account owners become the full owners of the account.”

Whitenack said a tax waiver is required when a person other than a spouse, child or charity inherits assets from a person who died as a resident of New Jersey.

“A surviving spouse who is inheriting assets from their spouse who died can complete and present to the bank a Form L-8 which makes the process to transfer or retitle assets much easier,” she said.

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This story was originally published in June 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.