In my 20+ years as an asset protection attorney, one mistake keeps showing up—especially in estate planning for real estate investors. People overlook how their bank accounts are titled. 

If you want to avoid probate court, prevent frozen bank accounts after death, and protect your beneficiaries from accidental disinheritance or creditor exposure, your bank accounts must be structured correctly.

Common shortcuts like joint accounts or naming beneficiaries often create bigger problems. The most reliable way to keep bank accounts out of probate and protect your family members is proper titling through a living trust.

Before going deeper, I recommend watching the original video where I walk through these scenarios and explain exactly how banks respond when someone passes away.

What Happens to a Bank Account When Someone Dies?

When it comes to estate planning for landlords, the first question every person should consider—and the one most people never ask until it’s too late—is how your heirs will pay the bills after your death.

A bank account titled solely in your individual name will always pass through the probate process.

Probate is a public, slow, and expensive legal process where a court oversees the transfer of a deceased person’s assets. Worse, probate creates a timing problem your family is not prepared for.

When a bank learns that an account holder has passed away, the bank typically freezes the account. 

That means:

• Bills tied to the estate can’t be paid
  
• Mortgage or property expenses may go unpaid
  
• Beneficiaries can’t access funds they may urgently need

Even if there is plenty of money in the account, no one can access it until a court appoints an executor or administrator.

For anyone conducting business, this can be especially damaging. Freezing an account doesn’t stop maintenance, taxes, or insurance premiums on rental properties.

Why Do Banks Freeze Accounts After Death?

Banks don’t freeze accounts to be difficult. They do it to protect themselves.

Once a person dies, the bank has no way of knowing:

• Who are the beneficiary designations
  
• Whether creditors have claims
  
• Whether multiple heirs are involved

Until a court confirms who has authority, the safest move for the bank is to lock the account down.

How Risky is Joint Tenancy With Right of Survivorship?

One of the most common pieces of advice people hear from bankers is to add someone to their account as a joint tenant with right of survivorship.

On the surface, it sounds logical.

When one joint owner dies, the survivor automatically becomes the account owner. No probate. No frozen funds.

That part is true.

The problem is what happens before death.

When you add someone as a joint tenant, you are giving them an ownership interest in your bank account right now.

I saw this firsthand with my own mother-in-law. A banker advised her to add my wife to her checking account to “avoid probate.” What the banker didn’t explain was the risk that came with it.

If someone sued my wife and won, that judgment could reach the account—even though the money belonged to my mother-in-law.

In community property states, the risk grows even larger. One spouse’s legal trouble can expose jointly owned assets to attack.

Joint tenancy can also create accidental disinheritance.

If you have multiple children and name just one as a joint tenant, that child becomes the sole owner at your death. Other heirs receive nothing from that account—even if your will says otherwise.

Yes, they may intend to “do the right thing.” But you’ve now shifted legal responsibility and tax consequences onto them.

Should You Name a Beneficiary on a Bank Account?

Another popular probate-avoidance strategy is naming a payable-on-death (POD) or designated beneficiary on the account.

Again, this can work mechanically. When you pass away, the named beneficiary receives the funds without probate.

But simplicity often hides risk.

If you name a beneficiary directly:

• The money vests immediately in their name
  
• There are no safeguards or timing controls
  
• The funds become exposed to their personal problems

If that beneficiary is in the middle of a divorce, lawsuit, bankruptcy, or creditor dispute, your money can be pulled directly into that mess.

There are limited situations where naming a beneficiary may make sense, such as a small account with a single heir and no complicating factors. But for most families, especially those with real estate holdings or multiple heirs, this approach creates more risk than it solves.

Can a Will Alone Solve the Problem?

Many people assume their will covers their bank accounts. It doesn’t.

If you title your bank account in your individual name, a court must validate the will before anyone can access the funds. The account still freezes. Probate still happens.

That delay can be devastating for surviving spouses, children, and business operations.

What is the Best Solution?

To avoid frozen bank accounts, eliminate probate, and control how and when assets are distributed, use a revocable living trust.

A living trust does not die when you do. It continues to exist, holding legal title to assets—including bank accounts.

When your bank account is titled in the name of your trust:

• The trust owns the account, not you individually
  
• The successor trustee steps in immediately upon death
  
• No probate is required for those assets
  
• The bank does not freeze the account

Your successor trustee simply presents a death certificate and proof of authority, and they are able to manage the funds without court involvement.

How Do You Retitle a Bank Account Into a Living Trust?

The process is straightforward.

Once you create the trust, you open a new bank account in the trust’s name. If your trust is called The Snowbird Trust, you open the bank account in that name.

You then:

• Transfer funds from your personal account into the trust account
  
• Close the old individual account

From that point forward, the trust owns the account. Your checks retain your personal name with the trust name on bank statements.

FAQ: Protecting Heirs & Keeping a Portfolio Running

1) Why should real estate investors and business owners care about bank account titling?

Because your bank accounts keep the machine running—mortgages, repairs, taxes, insurance, utilities, payroll, and vendors. If those accounts freeze at death, even briefly, your portfolio can destabilize fast. Titling the account in the name of a living trust helps prevent that disruption.

2) If we’re a married couple and both of us are on the business bank account, does that avoid probate?

Not necessarily. Putting a married couple on the account can keep the bank from freezing funds when the first spouse dies, but it doesn’t solve what happens after the second spouse passes—or how the account fits into the rest of your estate plan. A living trust is a cleaner way to keep control.

3) Can a living trust delay distributions if a beneficiary is in a divorce or lawsuit?

Yes. A living trust lets you give your trustee instructions to pause or stagger distributions when an heir is in a divorce, lawsuit, or any situation that could put the inheritance at risk. 

4.) Can creditors access bank account funds inherited by a beneficiary who is involved in a lawsuit?

It depends on how the account passes. If funds are transferred directly into the beneficiary’s name, those assets can become easier targets. A trust gives you more control over timing and can keep distributions from landing in the middle of a legal mess.

5) What if my heir is married, but I don’t want their spouse to receive any of the funds?

If money passes directly into your child’s name, their spouse may gain access through joint accounts, commingling, or day-to-day control. A living trust lets you control how and when funds go out, so your child benefits without automatically giving their spouse access. 

What is the Next Step?

If you’re serious about protecting your family, your real estate, and your legacy, this is not something to leave to chance—or to generic advice from a bank teller.

A living trust, done correctly, can eliminate probate, prevent frozen accounts, and give you peace of mind and your family clarity during an already difficult time.

If you’d like help reviewing your current estate plan or understanding how a living trust could work for you, schedule a free 45-minute Strategy Session with one of our senior advisors. We’ll walk through your goals, identify risks, and explain how to structure your estate plan the right way.

Planning now means your family doesn’t pay for it later.