It’s not something that’s top of mind for most people, but having another person listed as a signer or beneficiary on your checking or savings account may be worth considering.
Adding a Signer
A secondary signer – sometimes referred to as an “authorized signer” or a “convenience signer” – is a person who has access to a bank account without having ownership of it. A secondary signer has the same ability as the account owner to make withdrawals and deposits, sign checks, make transfers and initiate stop payments. The big difference, is that a secondary signer doesn’t have legal responsibility for the account (or for any fees it may incur).
It’s important to note that adding a signer to your account is not the same as adding a co-owner. With a joint account, you and the co-owner are both legally responsible for the account, and you would need their permission in order to remove them from the account. If you’ve only added a secondary signer, you retain ownership and legal responsibility for the account, and you can have the signer removed from the account at any time, and without reason.
Having a signer on your account can be helpful if you need help managing your finances – particularly if you become ill or incapacitated. Usually the account owner chooses a spouse, relative, business partner, or close friend as an authorized signer.
To add an authorized signer to an account, both you and the individual will usually need to go the bank to fill out an application and provide proper identification. There may be other conditions or terms specific to your bank, so it’s best to inquire in advance.
Adding a Beneficiary
A beneficiary is a person you have designated to receive any funds in your account after your death. It’s important to note that naming a beneficiary does not give them access to any of the funds or services associated with your account while you’re still living.
Most banks will allow you to add a beneficiary to your account free of charge, and most will also allow you to change the beneficiary as often as you’d like. As with naming an authorized signer, you’ll typically need to visit the bank in person in order to fill out required forms and provide proper identification, however some financial institutions do allow you to designate a beneficiary online.
It’s also possible to name more than one beneficiary on your accounts. In the event of your death, the funds in your account will typically be split amongst those individuals you’ve listed as your “primary beneficiaries”, while anyone listed as a “contingent beneficiary” will not receive the account funds unless the listed primary beneficiaries have also died. Some banks will even allow you to list charitable and non-profit organizations as account beneficiaries, as long as the IRS formally recognizes their status as a nonprofit or charitable entity.
The main advantage of having a beneficiary listed is that it takes the guesswork out of who gets the money in your account after you pass away. Under federal banking regulations, when you die, funds in your account can be released to a valid beneficiary without waiting for the reading of a will or the release of the estate by a probate judge or administrator. Usually the beneficiary will only needs to present a copy of your death certificate and proper photo identification to a bank official.
Again, it’s important to point out that rules and terms vary from one bank to another, so it’s best to consult with your own financial institution to determine exactly what is required to name an authorized signer or beneficiary on your accounts.
