Do bank accounts pass through a will in California

I recently spoke with a client, Emily, who was frantic. Her mother passed away unexpectedly, and Emily discovered a handwritten codicil to her mother’s Will, attempting to add a new beneficiary to a bank account. The codicil wasn’t properly witnessed, and the bank, understandably, refused to honor it. Emily faced the agonizing prospect of losing access to funds she believed were intended for her, and the legal fees to fight this were mounting quickly. This scenario, unfortunately, is far too common.

What Happens to Bank Accounts After Death in California?

The short answer is often “no,” bank accounts do not automatically pass through a Will in California. This is a significant misunderstanding among many of my clients. Bank accounts – and other financial assets like brokerage accounts – typically pass by what’s called “beneficiary designation,” or “pay-on-death” (POD) designation. If a beneficiary is named on the account, those funds go directly to that beneficiary, bypassing probate and, crucially, your Will entirely.

How Beneficiary Designations Override a Will

Think of it like this: a Will dictates where your general assets go. However, assets with designated beneficiaries have their own set of instructions. These instructions take precedence. A Will can’t override a valid POD designation. So, even if your Will leaves everything to your spouse, if you had a bank account with a different beneficiary listed, that beneficiary receives the funds, regardless of your Will’s instructions. This is why I emphasize to my clients the importance of coordinating their beneficiary designations with their estate plan.

When Does a Bank Account Become Part of the Probate Estate?

A bank account will become part of the probate estate—and therefore subject to the terms of your Will—only if there is no beneficiary designation and the account is held solely in your name. If combined ‘probate assets’ (excluding the AB 2016 residence) exceed $208,850 (the threshold effective April 1, 2025), they are subject to formal probate; a Will alone does not allow you to bypass this limit. Jointly held accounts with rights of survivorship also bypass probate, passing directly to the surviving joint owner.

The Small Estate Affidavit and Bank Accounts

There’s a common misconception about the Small Estate Affidavit. While it’s useful for transferring certain assets after death, it’s strictly for real property valued under $69,625, like timeshares or vacant land. It doesn’t apply to bank accounts. For deaths on or after April 1, 2025, a primary residence valued up to $750,000 qualifies for a ‘Petition for Succession’ under AB 2016 (Probate Code § 13151). Remember, this is a Petition requiring a Judge’s Order – not an Affidavit.

Digital Assets and Bank Account Access

It’s not just about the money in the account. Accessing the account itself can be problematic if you haven’t planned properly. Without specific RUFADAA language (Probate Code § 870) in your Trust or Will, service providers like Coinbase and Google can legally deny your executor access to your digital assets, which may include online banking credentials.

The Importance of Coordination and the CPA Advantage

I’ve been practicing estate planning and as a CPA for over 35 years, and I’ve seen firsthand how critical it is to coordinate all aspects of your estate plan. As a CPA, I’m uniquely positioned to help clients understand the tax implications of their asset transfers, including the potential for a step-up in basis – a significant benefit that can reduce capital gains taxes for heirs. This is especially important when dealing with accounts containing investments. Properly valuing those assets is crucial, and my expertise in both tax and estate planning allows me to navigate those complexities seamlessly.

Prop 19 and Property Tax Considerations

While we’re discussing asset transfer, remember Prop 19. Under Prop 19, heirs can only keep a parent’s low property tax base if they move into the home as their primary residence within one year and the home’s value is within specific limits. This can affect how you structure your estate plan, especially regarding real estate holdings.

• Beneficiary Designations are Key: Always prioritize setting up clear beneficiary designations on all financial accounts.
• Review Regularly: Review these designations at least annually, or whenever there’s a significant life event (marriage, divorce, birth, death).
• Coordinate with Your Will: Ensure your beneficiary designations align with your overall estate plan goals.
• Document Digital Access: Include RUFADAA language in your estate planning documents to ensure access to digital assets.

What does a California probate court look for when interpreting testamentary intent?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Resources for Asset Management & Transfer

• Property Tax Reassessment: California State Board of Equalization (Prop 19)
  This page details the “Base Year Value Transfer” rules. It explains that heirs can only avoid a property tax reassessment if the inherited home becomes their primary residence and the Homeowners’ Exemption is filed within one year of the date of death.
• Real Estate Probate (AB 2016): California Probate Code § 13151 (Petition for Succession)
  The specific statute for the AB 2016 process. It outlines the requirements for using a court-approved “Petition” (not an affidavit) to transfer a primary residence worth $750,000 or less (gross value) for deaths occurring after April 1, 2025.
• Small Estate Affidavit: California Probate Code § 13100 (Personal Property)
  Access the statutory language for the “Small Estate Affidavit.” This procedure is strictly for Personal Property (cash, stocks, vehicles) and is limited to estates with a total value of $208,850 or less (effective April 1, 2025).
• Federal Estate Tax Exemption: IRS Estate Tax Guidelines
  The authoritative federal resource for estate valuation. It reflects the 2026 exemption increase to $15 million per person, which is critical for high-net-worth asset planning and determining if an IRS Form 706 is required.
• Unclaimed Assets: California State Controller – Unclaimed Property
  The primary portal for executors and heirs to search for “lost” assets—such as forgotten bank accounts, uncashed dividends, and insurance benefits—that have been remitted to the State of California for safekeeping.
• Business/LLC Compliance: FinCEN – Beneficial Ownership Information (BOI)
  The official portal for corporate transparency reporting. Most domestic and foreign entities (LLCs, Corps) must file a report. Executors must verify compliance, as failure to update control information within 30 days of death can result in federal civil penalties.