Prior to marriage and even if we were living together, my husband and I maintain separate bank accounts. Except for the expenses at home and for the kids, we follow the “What’s mine is mine, what’s yours is yours” rule. It’s not about being selfish. We prefer keeping our money separate but have a “common fund” to pay for the bills, household help, grocery and kids’ needs.
When we got married, the husband decided to open a joint bank account. We still have our own separate money and accounts but having a joint bank account makes it convenient for us to easily deposit and get money since most checks are in my husband’s name. We opened a joint bank account where we pool our monthly contributions – and to save up for the rainy days.
Here’s a hypothetical situation: what if something happened to me or my husband (knock on wood)? What will happen to our joint bank account?
It is easy to say that any of us could withdraw the money anytime and use it for expenses, especially if it is an OR account. Unfortunately, that’s not how it goes.
Paragraph 2, Section 97 of the National Internal Revenue Code states that –
If a bank has knowledge of the death of a person, who maintained a bank deposit account alone, or jointly with another, it shall not allow any withdrawal from the said deposit account, unless the Commissioner has certified that the taxes imposed thereon by this Title have been paid
The joint account, or at least half of it since the law presumes equal sharing, becomes part of the estate. This means the estate taxes must be paid first before I or my husband could withdraw on our joint account. Once a BIR certificate is presented to show that estate taxes are paid, that’s the time I or he will be allowed to get money from the account.
This is where Survivorship Agreement comes in… 
There are cases when banks allow its joint depositors to withdraw money even if one (or more) co-depositor is dead. In this case, a Survivorship Agreement comes into play.
Survivorship Agreement is a contract wherein the parties agree that money in bank account or other certain properties are theirs in common. However, upon death of any one of the parties, such property will belong to the surviving party and has an effect of a donation.
Since it is a contract, all you need is to present the said agreement (make sure to have it notarized please) on the bank then bank must respect such agreement and treat the surviving party as the owner of the joint account/s left.
I talked to few people from the banks I transact with. Surprisingly, they can’t recall any of their depositors executing a Survivorship Agreement. There was even one manager who was shocked to find that there is such thing as a “Survivorship Agreement.” I was hoping I could get a sample form from them but it turns out, they haven’t heard of this too.
Does this mean I can get the whole amount?
NO. A joint bank account is a joint ownership since the ownership belongs to two different persons – me and my husband. The law (Article 485 of the Civil Code) presumes that the portions belonging to co-owners is equal or in 50/50 shares, unless it is proved that it’s not.
Although I am allowed to withdraw from the joint account, this doesn’t mean I could get the entire amount. The 50% still belongs to me, although there is a 2003 BIR ruling that allows the surviving depositor to withdraw up to P20,000 ONLY. On the other hand, the remaining half will be included in the computation of the value of my husband’s gross estate under Section 85(B) of the Tax Code or what BIR people call “transfer in contemplation of death.” So yes, a BIR certification must still be presented so I could withdraw even the last cent.
Is a Survivorship Agreement necessary?
It depends on where you stand. After research, I realized that with or without the said agreement, joint accounts are on equal footing and estate taxes must be paid at all costs.
Hence, it looks like opening a joint account is not a wise decision – unless you still maintain other separate accounts. Even if there is a survivorship agreement, the BIR will find a way to haunt you. Or, you could withdraw everything (yes, I’m trying to work on my humor here)!
Ayi is a stay-at-home mom of two. When her kids are in their best state, she keeps up with chores, work, and ensuring that her sanity is intact. Join her as she navigates through this rollercoaster ride called motherhood.
I never did understand why the BIR has to be involved in savings accounts. :/
The BIR is involved in almost everything! Kahit sa deathbed, they’ll find a way to haunt you. LOL! The savings account is part of your estate that’s why the bank won’t allow any withdrawals unless the estate tax is paid.
Me and hubby do things differently. He gives me all his salary and keeps just enough for his allowance. I handle family budgeting, but reports to him our expenses. The accounts are under both our names as “and/or”. Never heard of the survivorship agreement before though.
Interesting article. I’ll keep this in mind when we decide to open a joint account kasi as of now my husband and I have separate savings account.
Make sure to ask the bank about this. Most bank managers I talked to, medyo surprised pa sa idea ng survivorship agreement.
Upon reading, I wonder why banks haven’t use Survivorship Agreement and is it real that BIR haunts our accounts as well? Grabe naman sila..
Unfortunately, yes. It’s part of the estate kasi, that is why even the savings/checking accounts are included in the computation. I remembered my Tax professor saying, “From the moment you were born up until you die, you will pay taxes.” Grabe talaga.
Thank you for posting this. It’s good to know stuff that could affect our lives legally than be in the situation and not know what has to be done.
You’re welcome 🙂
This is really sad. Why do they have to complicate things and get involve in almost everything, including savings? really? 🙁
Apparently, taxes are the life-blood of the nation :)) Whatever you do, you can’t escape taxes.
Taxes from birth till death. Ay naman!
Grabe talaga. Really frustrating.
Good piece of information. Thanks for sharing!
hmmnn… now your post got me thinking about our finances.
Grabe. Maitanong nga ito sa bdo. Bigla tuloy ako naalarma.
BIR will aways find a way to make people pay taxes :((
we have almost that problem. my dad left a small amount in the bank, less than 10k, na-withdraw na kasi thru an authorized withdrawal slip yung iba. hehehe and before the bank releases the money
(take note! less than 10k lang sya ha!) my mom needs to produce a ton of paperwork. pinabayaan na lang nya kasi parang mas malaki pa ang magagastos nya to process everything than the money involved.
nakakaloka!!!
Yes, matrabaho and magastos talaga. Ang dami pa hihingin sayo. That’s our laws and we can’t do anything but to comply with it. Otherwise, mas sakit sa ulo :((
The only constant in life are death and taxes 😉
Hi Ayi, i am a bit confused here. Conflicting ung statements na “notarized survivorship agreement when presented to banks shld be respected by banks and treat the surviving party as the owner of the remaining joint account or property” vs ur opinion that a Survivorship Agreement is not necessary because “with or without the said agreement, joint accounts are on equal footing and estate taxes must be paid at all costs.”
Isn’t it with survivorship agreement (subj to *) since the remaining joint account or property will belong to the surviving spouse, the assets left still are NOT considered an estate since ownership still remains to a surviving individual? Hence, estate tax should not yet be paid?
Or are u saying the estate tax will be paid even if only one co-owner has died? If yes, then i dont see also the benefit of the Surv Agg.
*if banks will acknowledge and respect the notarize Surv Agg you have presented
Appreciate if you can clarify
Hi Larisa. It seems na “useless” din to have a Survivorship Agreement. With or without it, the remaining half will still be part of the estate; hence estate tax must be paid first before the entire amount can be withdrawn. Ideally, the survivorship agreement must be honored, but since may BIR Ruling (which is still standing as of this writing), hindi agad makukuha ang money unless all costs pertaining to the estate are paid.
How much is the estate taxes to be paid usually?
It depends on the assets 🙂
Hi, I’m quite confused because in Vitug v. CA (183 SCRA 755), the SC upheld the validity of the Survivorship Agreement between the spouses, meaning, the money after deducting the respective taxes was considered as exclusive property of the surviving spouse.
Hi, haven’t read the case yet. Will check it out. Thanks for raising this 🙂