Can Your Financial Institution Impose Restrictions on Your Accounts and Beneficiary Plans?

Using a financial power of attorney is one way to ensure that there’s someone else to step in and manage your assets if you become unable to do so, but be aware of not just the state’s rules about creating a power of attorney but your own financial institution’s policies around this.

Financial institutions can use contracts to limit your beneficiary naming and other strategies. The terms of your contract with your financial institution should be reviewed. This can be a beneficiary agreement, in your bank account signature card, or online. It is the document you would have signed when you opened it up. Your bank has the ability to determine how you style your financial accounts and how you name beneficiaries. This means that if you are not aware of a restriction because you didn’t read through the fine print when you opened the account, someone else could end up getting the assets inside those bank accounts. Since you won’t be around to deal with this situation, you want to have the clarity on what can be expected and the common pitfalls associated with it. An example of this can happen when you discuss things with your estate planning attorney and want to make sure that all of your children in equal shares receive your assets. If you fail to name contingent beneficiaries on your bank account form, for example, because this isn’t provided as an option, this can cause conflicts when it comes time to transfer those assets. Make sure that you gather any and all documents, such as account agreements with your banks and use these to schedule a consultation with your estate planning lawyer.