There seems to be no limit to the confusion surrounding signers and ownership rights on bank and investment accounts.

Even financial institution employees get it wrong.

Read on to get it right in Texas.

An account is just an agreement, called a contract of deposit, that you have with the financial institution.  The terms on your contract control access, ownership and what happens to the account when you die.

Let’s start simply.  On a single-party account, you, as the sole account party, own the account. When you die, the account goes into your probate estate. If you leave a will, then your will controls who will get the account.  If you die without a will, then state law controls who gets your account.

Optional add-on:  if you add a payable on death (POD) designation to your account, then upon your death the account ownership passes to the person you have designated.  The POD designee has no rights to the account while you are alive.

You can change your POD designee at any time.

Let’s move on to a different type of account:   multiple-party. In a multiple-party account, you own the account with other people.  Each of you is referred to as an account party.  Each party only owns his or her net contribution in the account but, paradoxically, each party has access to all of the funds in the account.  When you die, only your net contribution goes into your probate estate.

First add-on:  the parties can add a right to survivorship to the multiple-party account.  That means that, when a party dies, that party’s net contribution goes to the other parties in the account.

It does not go through the deceased party’s probate estate.

Second add-on:  the parties can also add a payable on death designation to the multiple-party account.  That means that when the last surviving account party dies, the account ownership goes to the payable on death designee.  Again, the account does not pass through the probate estate of any of the multiple- account parties.

Third add-on:  there is a very handy designation that can be added to either a single-party account or to a multiple-party account.  convenience signer.  A convenience signer does not own the account and does not have a right to the account with the account parties die.  The only power held by a convenience signer is making account transactions for the party.

The same person can be named a convenience signer and a payable on death designee.

Now for a few caveats.  An account holder’s rights are determined by state law;  the above definitions are from Texas law.  Texas is a community property state, so a party’s spouse, though unnamed on the account documents, may also hold an undivided 50% interest with the account party.   And even if the account passes according to a survivorship or payable on death designation, the administrator of an account holder’s probate estate may drag the account back into the estate to pay creditors.

And that’s it.

Virginia Hammerle, with Hammerle Finley Law Firm, is board certified in Civil Trial Law by the Texas Board of Legal Specialization.  See for her blog and newsletter sign-up.  This column does not constitute legal advice.