Legal Definitions - Multiple Party Account

A Multiple Party Account is a financial account, such as a checking, savings, or investment account, that is registered in the names of two or more individuals. These accounts are held at financial institutions like banks, credit unions, or brokerage firms. A key feature of multiple party accounts is their ability to facilitate the transfer of assets upon the death of one of the account holders, often allowing the assets to pass directly to the surviving account holder(s) without needing to go through the probate process typically required for assets transferred via a will. This makes them a common tool for estate planning.

• A Married Couple's Joint Checking Account
  Sarah and Mark, a married couple, share a checking account where both their names are listed as owners. They both deposit their paychecks into this account and use it to pay household bills. If one of them were to pass away, the funds in this account would typically become the sole property of the surviving spouse without needing to go through a lengthy legal process like probate. This arrangement ensures seamless access to funds for the survivor.

  How it illustrates the term: This is a multiple party account because it has two owners (Sarah and Mark) and is held at a financial institution (a bank). It also demonstrates its function as a will substitute, as the assets transfer directly to the surviving owner upon the death of the other.

• An Elderly Parent and Adult Child's Savings Account
  Evelyn, an elderly woman, adds her adult daughter, Lisa, as a co-owner to her primary savings account. Evelyn wants Lisa to be able to help manage her finances if Evelyn becomes incapacitated, and also wants the funds to pass directly to Lisa upon her death without delay, bypassing probate.

  How it illustrates the term: This is a multiple party account because Evelyn and Lisa are both registered owners of the savings account. It highlights the estate planning aspect, allowing for direct transfer of assets upon Evelyn's death and providing for financial management assistance during her lifetime.

• Siblings' Joint Investment Account
  After inheriting a sum of money from their aunt, siblings David and Maria decide to open a joint investment account together. They both contribute to the account and make investment decisions collaboratively, with the understanding that if one of them passes away, the other will automatically become the sole owner of the entire account's contents.

  How it illustrates the term: This investment account is a multiple party account because it is registered under the names of two individuals (David and Maria) at a brokerage firm. It illustrates how such accounts can be used by multiple parties for shared financial goals and how they provide a mechanism for asset transfer upon death outside of a will.