When it comes to money management, you might already be on top of your finances. Maybe you track your spending, budget wisely, and have a solid vision for your financial future. But even people who are on top of their finances often neglect one crucial aspect of banking: The beneficiary.

What Is a Beneficiary?

A beneficiary is the person or entity you name to receive the funds in your account upon your passing. It could be a loved one or an organization, such as a charity you’re passionate about, and you can name multiple—each with a different percentage of funds allocated to them.

Designating beneficiaries is a smart move for a few key reasons:

  • It ensures your funds are distributed to the people you want—according to your wishes, with as few legal delays as possible.
  • It helps your loved ones avoid the time, cost, and stress of probate during an already difficult time.
  • It provides financial security by ensuring your loved ones receive funds quickly and efficiently, helping them avoid late payments if your account was used to pay for household expenses such as rent, utilities, groceries, etc.

Important: Your beneficiary has no access to your account while you’re alive —only in the event of your passing.

 

What happens if you don’t name a beneficiary?

If there’s no beneficiary on file, your account becomes part of your estate. That means it goes through probate—a legal process that determines how your assets get distributed based on your will (or state law, if you don’t have a will). This can take months and is often expensive.

So how does the beneficiary account relate to joint account holders? Let’s explain so you can make informed decisions about your money’s future.

 

How Does This Compare to a Joint Account?

A joint account allows two or more individuals to share ownership of an account. Both parties have equal rights and access to the account, including the ability to deposit, withdraw, and manage the money and the account settings. And if one person passes away, the other typically takes over ownership automatically through what’s called the “right of survivorship.”

You can still designate a beneficiary on a joint account—but that beneficiary only receives the funds if all account holders have passed away.

 

Who should consider as a joint account holder?

  • Spouses or partners: for managing shared living expenses.
  • Parents and children: to help oversee financial decisions and habits, especially in situations involving elderly parents or young adult children.
  • Business partners: to share financial responsibilities, manage business funds and maintain transparency.

In addition to simplifying money management, a joint account gives all account holders full access to the money, allowing them to share financial responsibility and obligations.

 

Which Option Is Right for You?

Deciding between a beneficiary and a joint account depends on your financial goals and personal needs.

  • If your priority is smoothly transferring your assets after you’re gone, naming a beneficiary is the way to go.
  • If you want to manage money together—with a spouse, family member, or business partner—a joint account makes more sense.

Either way, making informed decisions about beneficiaries and joint accounts is essential for effective financial planning and ensuring your money is managed according to your wishes.


Need Help? Let’s Talk

Want to learn more about opening an account online, check out our handy guide. If you’d like to name a beneficiary, add a joint account holder, or ask more questions, feel free to contact us at (718) 335-1300 and let us help you secure your finances today with confidence.