What Happens to Bank Accounts When Someone Dies in Arizona?

Does a Bank Account Automatically Become Part of the Probate Estate?

No.

The fact that the deceased person's name appears on a bank account does not necessarily mean the money has to pass through probate.

Arizona recognizes several different types of accounts, including single-party accounts, multiple-party accounts, accounts with or without survivorship rights, and accounts with payable-on-death designations.

The first thing to determine is therefore not simply:

“How much money is in the account?”

It is:

“How is the account legally titled, and what happens to it at death?”

That answer may determine whether the personal representative controls the account or whether the money passes directly to someone else.

What Happens to an Account That Was Only in the Deceased Person's Name?

Suppose Dad dies with $75,000 in a savings account titled solely in his name.

There is no joint owner and no payable-on-death beneficiary.

Arizona law generally treats the balance in a single-party account without a POD designation as part of the deceased person's estate.

That does not necessarily mean a full probate will be required.

The estate might qualify for Arizona's small-estate procedure, which we discuss below.

But if no nonprobate transfer or small-estate procedure applies, a personal representative may need to be appointed to obtain authority over the account.

Once appointed, an Arizona personal representative generally has the right to take possession or control of estate property and broad authority over property belonging to the estate.

Does the Will Let Me Go to the Bank and Withdraw the Money?

Not necessarily.

This is a common misunderstanding.

Suppose Dad's will says:

“I leave everything to my daughter, Sarah, and nominate Sarah as personal representative.”

Sarah takes the will to Dad's bank and asks the bank to give her the money.

The bank may not do that merely because she has the will.

A will can establish who is entitled to inherit and nominate someone to serve as personal representative, but the will itself does not necessarily establish that person's present authority to collect a probate account.

If probate is required, the court appointment establishes the personal representative's authority.

This is the same distinction we see with real estate: being named in a will and having present legal authority over an estate asset are not necessarily the same thing.

What Happens to a Joint or Multiple-Party Bank Account When One Owner Dies?

Arizona law generally provides survivorship rights in a multiple-party bank account unless the terms of the account provide otherwise.

When one party to a multiple-party account dies, the funds generally belong to the surviving party or parties. This is true even if the account does not expressly use the words “right of survivorship.”

The principal exception is when the terms of the account provide that it is without right of survivorship, such as an account designated as a tenancy in common. In that situation, the deceased party's beneficial share generally passes to the deceased party's estate.

For example:

Mom and Daughter are parties on a multiple-party account.

Mom dies.

If the account does not provide that it is without right of survivorship, Arizona's statutory survivorship rule generally means the funds pass to Daughter after Mom's death rather than becoming part of Mom's probate estate.

That is why the absence of the words “right of survivorship” on an account does not necessarily mean the deceased owner's share passes through probate.

The actual account terms still matter, particularly if the account expressly provides that there is no survivorship right.

Does Being Listed on Mom's Bank Account Always Mean I Owned Half the Money While She Was Alive?

No.

This is an important distinction between beneficial ownership during life and rights at death.

Under Arizona law, during the parties' lifetimes, funds in a multiple-party account generally belong to the parties in proportion to their net contributions unless there is clear and convincing evidence of a different intent. Special rules apply to married parties.

Rights at death are governed separately by Arizona's survivorship statute.

That means Dad could add Daughter to a multiple-party account, contribute all of the money himself, and remain the beneficial owner of those funds during his lifetime. Yet if Daughter survives Dad and the account is not designated as being without survivorship rights, Daughter may become entitled to the account at Dad's death.

So when someone says:

“My name was on Mom's account,”

we may need to ask two different questions:

Who beneficially owned the money while Mom was alive?

And who became entitled to the money when Mom died?

Those questions do not necessarily have the same answer.

What If I Was Just Added to the Account to Help Mom Pay Her Bills?

This is where bank-account disputes can become complicated.

An elderly parent may add an adult child to an account because the child is helping pay bills, purchase groceries, or manage finances.

After the parent dies, the child may believe:

“My name is on the account, so all of the money is mine.”

Other siblings may respond:

“Mom only put you on the account so you could help her.”

The account documents and Arizona's multiple-party-account statutes become very important.

Arizona distinguishes between a party to an account and an agent authorized to make transactions. An agent designated on an account does not acquire a beneficial right to the money merely because the person was authorized to transact on the account.

If the child was actually made a party to a multiple-party account, Arizona's statutory survivorship rules may apply even if the parent supplied the money during life. If the child was merely an agent or authorized signer, the result can be very different.

When a substantial account is involved and the family disagrees about the account arrangement or the deceased person's intent, the issue should be evaluated before the money is spent or distributed.

What Is a Payable-on-Death or POD Account?

A payable-on-death designation allows the owner of an account to name one or more beneficiaries to receive the account after the owner's death.

During the account owner's lifetime, a POD beneficiary does not have a right to the money merely because that person has been named as beneficiary.

After the sole owner—or last surviving party, when applicable—dies, the balance generally belongs to the surviving POD beneficiary or beneficiaries.

The financial institution may pay the beneficiary after receiving the required proof of death.

This can allow a bank account to pass without probate.

What If There Are Two POD Beneficiaries?

Arizona law addresses that situation as well.

When two or more POD beneficiaries survive the account owner, the sums on deposit generally belong to the surviving beneficiaries in equal and undivided shares.

For example:

Dad has a $100,000 savings account.

His two children, Anna and Ben, are the surviving POD beneficiaries.

Assuming the designation is effective and no other issue changes the result, the account generally passes to Anna and Ben rather than becoming an ordinary probate asset.

What If the POD Beneficiary Died Before the Account Owner?

That can change the result substantially.

Arizona's statute provides that if no POD beneficiary survives the account owner, the sums on deposit belong to the estate of the last surviving party.

That can create an unexpected probate.

For example, Mom may have named her husband as the sole POD beneficiary years ago.

Her husband dies first.

Mom never changes the designation.

When Mom later dies, the family discovers that there is no surviving POD beneficiary.

The account that everyone assumed would avoid probate may now be an estate asset.

Can a Will Change the Beneficiary on a POD Account?

Generally, no.

Arizona law expressly provides that survivorship rights arising from the account terms and a payable-on-death designation cannot be altered by will.

That is extremely important.

Suppose Dad's bank account names Daughter A as the POD beneficiary.

Five years later, Dad signs a will stating:

“I leave my estate equally to Daughter A and Daughter B.”

Dad never changes the POD designation at the bank.

The will does not simply rewrite the account contract.

That is one reason estate administration requires us to examine both the estate-planning documents and the way individual assets are titled.

Can the Bank Freeze an Account After Someone Dies?

A financial institution may restrict access to an account after learning of an owner's death while it determines who has authority to receive the funds and what documentation is required.

From the family's perspective, the practical question is usually not whether the bank calls the account “frozen.”

The important question is:

“What documentation does the bank require before it will release the money?”

Depending on the account, that might involve proof of death and identification of a surviving party or POD beneficiary, Letters establishing a personal representative's authority, or a qualifying small-estate affidavit.

Do not assume that having the debit card, knowing the PIN, or having previously been authorized to help the deceased person gives you the right to withdraw money after death.

Can I Keep Using Mom's Debit Card After She Dies?

Do not assume that you can.

Possessing someone's debit card or knowing the PIN is not the same thing as legally owning the money after that person dies.

Once the owner dies, rights in the account depend on the account arrangement and Arizona law.

If the account belongs to the estate, the personal representative is generally responsible for taking control of estate property.

Continuing to withdraw money simply because you still have access can create accounting problems and, in a disputed estate, potentially much more serious allegations.

The safer course is to determine who owns the funds and who has legal authority before using them.

What Is an Estate Bank Account?

When probate is opened, the personal representative will often establish a bank account in the name of the estate.

Estate funds can then be collected into that account.

For example, the personal representative may collect money from the deceased person's individual bank accounts, deposit proceeds from the sale of estate property, receive refunds or other amounts owed to the decedent, and use estate funds to pay legitimate administration expenses and obligations.

Keeping estate money separate also makes it much easier to account for what came into the estate, what was paid, and what remains available for distribution.

The personal representative is a fiduciary and must administer the estate for the benefit of those interested in it.

Estate money should not simply be mixed into the personal representative's own checking account.

What Does the Bank Usually Need From the Personal Representative?

If an account belongs to the probate estate, the financial institution will ordinarily want documentation showing the personal representative's legal authority, along with whatever identification and estate-account documentation the institution requires.

The exact process varies among banks.

Once properly appointed, however, the personal representative has broad statutory authority over estate property. Arizona law describes that authority as the same power over title to estate property that an absolute owner would have, but held in trust for creditors and others interested in the estate.

That is why obtaining the appointment can be the critical step when substantial accounts are titled solely in the deceased person's name.

Can I Use a Small Estate Affidavit Instead of Opening Probate for a Bank Account?

Potentially.

This can be one of the most useful alternatives to probate in the right Arizona estate.

Under current Arizona law, after at least 30 days have passed since death, a qualifying successor may use Arizona's personal-property affidavit procedure if the statutory requirements are satisfied and the value of all personal property in the decedent's estate, wherever located, less liens and encumbrances, does not exceed $200,000.

The statute contains additional requirements. Among other things, the person using the ordinary procedure must be entitled to the property, and funeral and last-illness expenses must have been paid. The statute also addresses whether a personal representative is pending or has already been appointed.

So do not look only at the balance in one bank account.

If Dad has a $150,000 account plus other probate personal property, the total qualifying personal property matters when determining whether the procedure is available.

Does the $200,000 Limit Include the House?

Not in the personal-property calculation.

Arizona has separate small-estate procedures for personal property and real property.

Bank accounts are personal property.

Arizona currently permits qualifying personal property of up to $200,000, after liens and encumbrances, to potentially be collected under the personal-property affidavit procedure. The real-property procedure has separate requirements and a separate $300,000 limit.

This distinction can produce situations where a family can use the personal-property affidavit for bank accounts but needs a different procedure to deal with Arizona real estate.

What If the Account Has $250,000 in It?

If a $250,000 individually owned bank account is part of the probate estate, the ordinary $200,000 personal-property affidavit procedure will generally not solve the problem because the qualifying personal property exceeds the statutory limit.

But the account balance alone still does not tell us whether probate is necessary.

First determine whether there is a surviving party to a multiple-party account, POD beneficiary, trust ownership, or another nonprobate mechanism.

A $500,000 account with an effective POD beneficiary may present less of a probate issue than a $225,000 account titled solely in the deceased person's name with no beneficiary.

How the account is owned can matter more than how much money is in it.

What If Nobody Knows Where Dad Had His Bank Accounts?

This happens frequently.

Start with the information available.

Review recent mail, tax returns, electronic records, checkbooks, debit cards, financial statements, automatic deposits and withdrawals, and records of interest income.

Once appointed, the personal representative has statutory authority and responsibility concerning estate property and can work to identify and collect assets belonging to the estate.

The personal representative must also prepare an inventory of the decedent's property, generally within 90 days after appointment, subject to Arizona's statutory requirements.

Finding the accounts is therefore part of properly administering the estate.

What If One Sibling Already Took the Money?

That needs to be addressed quickly.

Suppose Mom dies with $80,000 in an account.

One child had access to the account before Mom's death and withdraws the entire balance immediately afterward.

Whether that child was legally entitled to the money depends on the account arrangement and other facts.

The personal representative of an Arizona estate has statutory rights concerning possession and control of estate property, and Arizona law provides procedures when someone is suspected of concealing, embezzling, conveying, or disposing of property belonging to the decedent.

Do not assume that possession of the money settles the ownership question.

If substantial funds have been removed and the family disagrees about who owns them, get legal advice before the money disappears.

Do POD and Multiple-Party Accounts Always Escape the Decedent's Creditors?

Not necessarily.

There is an important distinction between saying an account passes outside probate and saying the funds can never be reached for estate obligations.

Arizona has a separate statute addressing potential liability of certain nonprobate transferees for creditor claims and statutory allowances when the probate estate is insufficient. That statute expressly addresses multiple-party accounts in defining the relevant nonprobate transfer.

That issue is more complicated than ordinary account ownership and depends on the estate's circumstances.

A beneficiary or surviving party who receives a substantial nonprobate account should therefore not automatically assume that creditor issues can never affect the funds.

The First Question Is How the Account Is Titled

When a family member dies, do not begin by assuming every bank account belongs to the estate.

And do not assume every account avoids probate merely because someone else's name appears on it.

For each account, determine:

Who were the parties?

Did the account expressly provide that it was without right of survivorship?

Was there a POD beneficiary?

Was someone merely an agent authorized to transact business?

Did the named beneficiary survive the account owner?

Is the account actually part of the probate estate?

If it is, does the estate qualify for Arizona's small-estate affidavit procedure?

Once those questions are answered, it is usually much easier to determine what needs to happen next.

Not Sure What Happens to a Bank Account After Someone Dies?

If a family member died with bank accounts in Arizona and you are unsure who is entitled to the money, The Law Offices of Jeffrey D. Lynch can help determine how the accounts pass, whether they belong to the probate estate, whether a small-estate affidavit may be available, and whether an Arizona probate needs to be opened.

You do not need to know the type of account before contacting us.

Bring whatever information you have—the bank statement, account title, beneficiary information, will or trust, and information about the rest of the estate—and we can help determine the appropriate next step.

Request an Arizona Probate Consultation

This page provides general information about Arizona law and is not legal advice. Rights to a particular bank account depend on the account agreement, ownership, survivorship provisions, beneficiary designations, estate circumstances, and applicable law.