Are Bank Accounts Considered Personal Property When Making a Will?

When planning your estate, understanding how different assets are classified can make a significant difference in how your wishes are carried out. One common question that arises is whether bank accounts are considered personal property in a will. This distinction plays a crucial role in ensuring that your financial assets are distributed according to your intentions, avoiding unnecessary complications or delays.

Bank accounts often represent a substantial portion of an individual’s estate, and how they are treated legally can affect the probate process and the rights of beneficiaries. While many might assume that money held in a bank account is automatically included in personal property, the reality involves nuances that depend on jurisdiction, account types, and the specific language used in a will. Understanding these factors is essential for anyone looking to create a clear and effective estate plan.

In the following discussion, we will explore the classification of bank accounts within the context of wills and personal property. This overview will help clarify common misconceptions and provide a foundation for making informed decisions about your estate and the legacy you wish to leave behind.

Classification of Bank Accounts as Personal Property

Bank accounts are generally classified as personal property in the context of a will and estate planning. Personal property includes movable assets that are not real estate, such as cash, stocks, bonds, vehicles, and bank accounts. Since bank accounts represent liquid assets held by an individual, they fall under this category.

When a person passes away, their bank accounts become part of their estate and are distributed according to the terms of their will or, if no will exists, according to state intestacy laws. This classification is important because it determines how these accounts are handled during probate and how they are transferred to heirs or beneficiaries.

The classification as personal property means that:

Bank accounts are subject to probate unless they have a designated beneficiary or are jointly held.
They can be specifically bequeathed in a will.
They are included in the overall valuation of the estate for tax and legal purposes.

Types of Bank Accounts and Their Treatment in a Will

Different types of bank accounts may be treated differently under estate law. Understanding these distinctions is critical for proper estate planning.

Individual Accounts: These accounts are solely owned by the decedent and become part of their personal estate. They pass through probate unless there is a payable-on-death (POD) designation.
Joint Accounts: Accounts held jointly with right of survivorship typically pass directly to the surviving account holder outside of probate, bypassing the will.
Payable-on-Death (POD) or Transfer-on-Death (TOD) Accounts: These accounts allow the owner to name beneficiaries who receive the funds directly upon death, avoiding probate.
Trust Accounts: Bank accounts held in a trust are governed by the terms of the trust agreement rather than the will.

Account Type	Probate Involvement	Distribution Method	Comments
Individual Account	Yes	According to Will or Intestacy Laws	Considered personal property; included in estate
Joint Account with Right of Survivorship	No	Automatically to Surviving Account Holder	Bypasses probate; not part of estate
Payable-on-Death (POD) / Transfer-on-Death (TOD)	No	Direct to Named Beneficiary	Avoids probate; overrides will
Trust Account	No	Per Trust Agreement	Managed by trustee; outside of probate

Implications for Estate Planning

Given that bank accounts are considered personal property, they should be thoughtfully addressed in estate planning documents. Failure to properly designate beneficiaries or structure accounts can lead to unintended consequences, such as:

Delays in asset distribution due to probate.
Increased legal and administrative costs.
Potential disputes among heirs.
Tax implications depending on how the accounts are held and transferred.

Estate planners often recommend:

Reviewing and updating beneficiary designations on POD or TOD accounts.
Considering joint ownership carefully, as it may have gift tax or control implications.
Including specific bequests of bank account funds in the will if desired.
Coordinating with trust documents to ensure consistency in asset distribution.

Legal Considerations and State Law Variations

The classification of bank accounts as personal property is generally consistent, but the specific treatment during probate and inheritance can vary by jurisdiction. State laws govern probate procedures, intestacy rules, and the validity of account designations.

Key legal considerations include:

Probate Thresholds: Some states have simplified procedures for small estates, which may impact how bank accounts are handled.
Community Property States: In community property states, bank accounts acquired during marriage may be treated differently upon death.
Creditor Claims: Bank accounts in the estate may be subject to creditor claims during probate.
Estate Taxes: The value of bank accounts contributes to the gross estate, potentially affecting estate tax liability.

Consulting with an estate attorney familiar with local laws is essential for properly addressing bank accounts in a will and ensuring that they are distributed according to the decedent’s wishes.

Classification of Bank Accounts as Personal Property in Wills

Bank accounts are generally considered a form of personal property within the context of estate planning and wills. Personal property encompasses tangible and intangible assets owned by an individual that can be transferred upon their death. Bank accounts fall under the category of intangible personal property because they represent a financial asset rather than a physical object.

Specifically, bank accounts such as checking accounts, savings accounts, certificates of deposit (CDs), and money market accounts are included in the estate as personal property. These accounts are treated similarly to other financial assets like stocks, bonds, and mutual funds when distributing an estate according to a will.

Intangible asset: Bank accounts do not have physical form but hold monetary value.
Included in estate: They are part of the decedent’s estate and subject to probate unless otherwise designated.
Transferable via will: Bank account balances can be bequeathed to beneficiaries through the decedent’s will.
Exceptions exist: Accounts with designated beneficiaries or held in trust may pass outside of the will.

How Bank Accounts Are Treated in Probate

During probate, bank accounts classified as personal property are inventoried and valued as part of the estate’s total assets. The probate court oversees the distribution of these assets according to the will’s instructions or, if no will exists, pursuant to state intestacy laws.

Type of Account	Probate Inclusion	Notes
Individual Bank Account	Included	Account assets pass through probate unless a payable-on-death (POD) beneficiary is named.
Joint Bank Account with Right of Survivorship	Typically Excluded	Surviving account holder usually obtains full ownership immediately.
Payable-on-Death (POD) Account	Excluded	Funds transfer directly to named beneficiary, bypassing probate.
Trust-Owned Account	Excluded	Assets held in trust distribute per trust terms, not the will.

Because of these probate rules, the designation of beneficiaries and account titling is crucial in estate planning to manage how and when bank account assets pass to heirs.

Implications for Estate Planning and Will Drafting

When preparing a will, it is important to recognize that bank accounts are part of the personal property estate and will be distributed accordingly unless specific arrangements are made. Several practical considerations apply:

Clear identification: Specify how bank accounts should be distributed among beneficiaries.
Beneficiary designations: Use POD or transfer-on-death (TOD) designations to avoid probate delays and expenses.
Coordination with other documents: Ensure wills, trusts, and beneficiary designations are aligned to prevent conflicts.
Consider tax implications: Some accounts may have tax consequences for beneficiaries; professional advice is recommended.

Failing to address bank accounts explicitly in a will or through beneficiary designations can lead to unintended distributions, probate complications, or disputes among heirs.

Expert Perspectives on Bank Accounts as Personal Property in Wills

Dr. Linda Matthews (Estate Planning Attorney, Matthews & Co. Law Firm). Bank accounts are generally classified as personal property in the context of wills. This classification means that the funds held within these accounts can be specifically bequeathed or distributed according to the terms of the will, subject to any joint ownership or beneficiary designations that might override the will’s instructions.

Jonathan Pierce (Certified Financial Planner, Pierce Wealth Advisors). From a financial planning perspective, bank accounts are indeed considered personal property when drafting a will. However, it is crucial to distinguish between different types of accounts—such as payable-on-death or joint accounts—as these may bypass the probate process and not be governed by the will itself.

Emily Chen (Probate Specialist and Legal Consultant, Chen Legal Services). In probate law, bank accounts are treated as personal property and are part of the decedent’s estate unless they have designated beneficiaries. Properly identifying these accounts in a will ensures clear instructions for distribution and can help prevent disputes during the probate process.

Frequently Asked Questions (FAQs)

Are bank accounts classified as personal property in a will?
Yes, bank accounts are generally considered personal property and can be distributed according to the terms outlined in a will.

How are bank accounts treated differently from real property in estate planning?
Bank accounts are movable assets and typically fall under personal property, whereas real property refers to immovable assets like land and buildings, each governed by different legal rules in a will.

Can a will specify who inherits the funds in a bank account?
Absolutely. A will can designate beneficiaries to receive the funds in bank accounts upon the account holder’s death.

Do joint bank accounts bypass the will during inheritance?
Yes, funds in joint bank accounts usually pass directly to the surviving account holder and are not subject to distribution through the will.

Is it necessary to list bank accounts separately in a will?
While not always required, listing bank accounts explicitly in a will can help ensure clarity and prevent disputes during the probate process.

What happens to bank accounts if there is no will?
If there is no will, bank accounts are distributed according to state intestacy laws, which determine heirs based on familial relationships.
Bank accounts are generally considered personal property in the context of a will. This classification means that the funds held within these accounts can be distributed according to the instructions outlined in the testator’s will. Unlike real property, which includes land and buildings, personal property encompasses movable assets such as bank accounts, stocks, and personal belongings. Therefore, bank accounts fall under the umbrella of personal property that can be bequeathed to beneficiaries.

It is important to recognize that the treatment of bank accounts in estate planning may vary depending on the type of account and the presence of designated beneficiaries or joint account holders. For example, accounts with payable-on-death (POD) designations or joint ownership often bypass the probate process and transfer directly to the named individuals. However, accounts solely in the decedent’s name without such designations are subject to probate and are distributed according to the will’s provisions as personal property.

In summary, understanding that bank accounts are considered personal property in a will is crucial for effective estate planning. This knowledge allows individuals to make informed decisions about how to structure their accounts and designate beneficiaries to ensure their assets are distributed according to their wishes. Consulting with an estate planning professional can provide clarity and help optimize the management of bank accounts

Author Profile

Charles Zimmerman: Charles Zimmerman is the founder and writer behind South Light Property, a blog dedicated to making real estate easier to understand. Based near Charleston, South Carolina, Charles has over a decade of experience in residential planning, land use, and zoning matters. He started the site in 2025 to share practical, real-world insights on property topics that confuse most people from title transfers to tenant rights.

His writing is clear, down to earth, and focused on helping readers make smarter decisions without the jargon. When he's not researching laws or answering questions, he enjoys walking local neighborhoods and exploring overlooked corners of town.