Understanding Multiple-Party Account: Legal Definition and Types

Q: Can I change the beneficiaries of a P.O.D. account?

Yes, you can change beneficiaries at any time as long as you are the account holder.

Q: Are multiple-party accounts subject to taxes?

Tax implications can vary based on the account type and contributions. It&#039;s best to consult a tax professional for specific advice.

Definition & Meaning

A multiple-party account is a bank or financial account that has more than one owner. The ownership of the account is shared among the parties based on their individual contributions. This type of account is often seen as a substitute for a will because it allows for the transfer of assets to the beneficiaries during the lifetime of the account holder. Each owner has a current interest in the account, meaning they can access and manage the funds. Common forms of multiple-party accounts include:

Joint accounts
P.O.D. (Payable on Death) accounts
Trust accounts

However, accounts established for business purposes, such as partnerships or joint ventures, do not qualify as multiple-party accounts.

Table of content

Legal Use & context

Multiple-party accounts are commonly used in estate planning and financial management. They allow individuals to designate beneficiaries who can access funds without going through probate after the account holder's death. This legal structure is relevant in various areas, including:

Estate law
Family law
Financial planning

Users may manage these accounts themselves with the right tools, such as legal templates offered by US Legal Forms, which can assist in creating the necessary agreements and documentation.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A husband and wife open a joint account to manage household expenses. Both have equal access to the funds, and upon the death of one spouse, the surviving spouse retains full ownership of the account.

Example 2: A parent sets up a P.O.D. account for their child, ensuring that the funds will be accessible to the child without probate proceedings after the parent's passing. (hypothetical example)

Relevant laws & statutes

According to 8-A M.R.S. § 6-101, a "multiple-party account" includes joint accounts, P.O.D. accounts, and trust accounts. It specifically excludes accounts for business purposes or those controlled by agents for organizations.

State-by-state differences

Examples of state differences (not exhaustive):

State	Key Differences
California	Allows for specific provisions in joint accounts regarding rights of survivorship.
Texas	Requires written agreements for certain types of multiple-party accounts.
New York	Has specific rules regarding the management of funds in trust accounts.

This is not a complete list. State laws vary, and users should consult local rules for specific guidance.

Comparison with related terms

Term	Definition	Difference
Joint Account	An account shared by two or more individuals.	Type of multiple-party account with shared ownership.
P.O.D. Account	An account that designates a beneficiary to receive funds upon the owner's death.	Specific type of multiple-party account focused on beneficiary designation.
Trust Account	An account managed by a trustee for the benefit of another party.	Another type of multiple-party account, but involves fiduciary responsibilities.

Common misunderstandings

What to do if this term applies to you

If you are considering setting up a multiple-party account, evaluate your needs and the implications of shared ownership. It may be beneficial to consult with a financial advisor or attorney to ensure that your account aligns with your estate planning goals. You can also explore US Legal Forms for templates that can help you create the necessary documentation. If your situation is complex, seeking professional legal assistance is advisable.

Find the legal form that fits your case

Browse our library of 85,000+ state-specific legal templates.

This field is required

Quick facts

Ownership: Shared among multiple parties
Types: Joint accounts, P.O.D. accounts, trust accounts
Exclusions: Business accounts, accounts controlled by agents
Transfer of assets: Occurs during the lifetime of the account holder
Legal assistance: Recommended for complex situations

Key takeaways

Frequently asked questions

What happens to a multiple-party account when one owner dies?

The remaining owners typically retain access to the account, and the deceased owner's share may pass to the surviving owners or designated beneficiaries, depending on the account type.