An important part of life planning is planning for after-life. This step includes writing your Will and noting how you want to distribute your Estate. Part of your Estate includes your bank accounts.
Bank accounts after death are not discussed often but are an important part of your Will to protect your assets and loved ones. Keep reading to learn more about what happens to your bank accounts after you pass away.
What happens to bank accounts when someone dies?
When someone dies, the next of kin or executor of the estate needs to notify the banks where the deceased has an account. After notifying the bank, they typically need a certified Proof of Death document such as a death certificate.
Depending on the value of the Estate, the bank may also ask for further proof through documents such as the Will, Probate or Letters of administration. After the bank validates the death, there is a permanent hold on any transaction accounts, which includes:
- You can’t withdraw money from the accounts
- Direct debits stop
- Credit continues to any estate accounts
Paying expenses and debt from your bank account
Before everything settles, the executor will need to pay for funeral expenses. Funds to cover funeral expenses are the only withdrawal that administrators of estates can make with the bank until the documents are verified.
The Executor would need to provide the bank with a receipt for the funeral expenses and then payout that amount from the account. If they’re already aware of the death, they can also pay out those expenses before freezing the account.
Joint account holders
If you are the joint holder of an account, the account is transferred to the surviving holder after the bank receives the official Death Certificate. In general, joint accounts are not frozen after one holder passes away, and the funds don’t form part of the deceased estate.
The rule of survivorship does apply to joint bank accounts. This rule means that when the joint account holder passes away, the surviving joint account holder gains full control of the account and the remaining funds.
Where does the money go?
The way your funds are distributed after death will depend on whether you die with or without a Will. The importance of writing your will is for this reason and many others.
If you die with a Will
When you die with a Will, the money in your accounts becomes a part of your estate. These funds will be distributed according to the wishes you’ve outlined in your Will. A grant of probate may be necessary, depending on your estate's size and the bank.
If you die intestate
Dying intestate means dying without a Will. In this case, your Next of Kin will need to apply for a Letter of Administration to become the administer of your estate. They would then present this to the bank to release the funds in your account.
Bank accounts after death are perhaps a more taboo topic that most people might not think about until it's too late. To protect your estate and your loved ones, make sure to outline your bank accounts in your Will clearly.