Cecily Zamora
When a person dies, their bank accounts need to be closed, and their funds distributed. This process is overseen by a probate court, which grants permission to a designated executor or administrator to collect the funds and place them in an estate account. Joint owners or beneficiaries of the deceased person's account can work with the bank directly to access the funds. If there is no joint owner or beneficiary, the account becomes part of the deceased owner's estate, and the executor or administrator must produce a death certificate to collect the funds.
| Characteristics | Values |
|---|---|
| Who can access a deceased person's bank account? | Joint owners, beneficiaries, or executors |
| What happens if there is no joint owner or beneficiary? | The account becomes part of the deceased owner's estate, and the legally designated executor can collect the funds and place them in an estate account |
| What happens to a joint account when one owner dies? | The surviving owner will be able to withdraw funds from the account |
| What happens if there is a payable-on-death beneficiary? | The bank account balance goes to the beneficiary after the last account owner dies |
| What happens if there is no will or executor? | A relative or legal representative must request permission from the probate court to close the account |
| What happens if there is no beneficiary or will? | The executor of the estate handles any assets the deceased owned, including money in bank accounts. If there is no will to name an executor, the state appoints an administrator based on local law |
| What happens if there is no will, no beneficiary, and no executor? | In most states, most or all of the money goes to the deceased's spouse and children |
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Joint account holders
When a bank account owner dies, the process is generally straightforward if the account has a joint owner or beneficiary. If there is no joint owner or beneficiary, the account becomes part of the deceased owner's estate and is settled during probate, where the court oversees the distribution of assets according to the deceased's will or special laws in the absence of a will.
Joint bank accounts are typically owned by spouses, relatives, or friends. Most joint bank accounts are held with "rights of survivorship", which means that when one account owner dies, the money passes to the surviving owner or owners. The surviving owner will be able to withdraw funds from the account and the account does not go through the probate process.
However, joint accounts can also be titled as "tenants in common". In this case, after the death of one of the owners, that person's share of the account passes to their heirs, either as described in their will or per their state's laws.
It is important to note that joint owners, beneficiaries, or executors are the only ones who can access a deceased person's bank account. To access the funds, the joint owner, beneficiary, or executor must provide a copy of the death certificate to the bank.
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Beneficiaries
When a person dies, their bank accounts (e.g. checking accounts, savings accounts, retirement accounts) become inaccessible except to joint owners, beneficiaries, or executors. If there is no joint owner or beneficiary, the account becomes part of the deceased owner's estate, and the legally designated executor can collect the funds and place them into an estate account.
A beneficiary is a person or entity designated by the owner of a bank account to inherit the contents of their account upon their death. The beneficiary can claim the funds by contacting the bank and providing a death certificate. This process is outside of probate, regardless of whether the owner had a will or not. Therefore, a beneficiary can access the deceased's bank account without needing to go through the probate process.
The process of claiming a deceased person's bank account can be straightforward, especially if the account owner had designated a payable-upon-death beneficiary. However, it is recommended to work closely with a probate attorney to ensure beneficiary rights are upheld during the trust and estate administration process, and to promptly resolve any disputes that may arise.
In the case of a sole-owned bank account, it is beneficial to add a beneficiary to the account and provide them with the name of the bank and the account number. This can help prevent issues such as inactive account fees draining the account.
If there is no will or executor named in the will, a relative or legal representative must request permission from the probate court to close the account. They will need to present either a Letter of Testamentary or a Letter of Administration, along with the death certificate, to the bank to close the account.
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Executors
An executor is an individual appointed to administer the last will of a deceased person and carry out the instructions to manage the affairs. They are appointed either by the testator (the person making the will) or by a court. The primary duty of an executor is to carry out the wishes of the deceased person based on instructions spelled out in their will or trust documents.
In some instances, the estate executor needs to appear in court as a representative of the estate. The executor is generally required to go to the initial probate hearing. If there are disagreements among heirs or interested parties that trigger probate litigation, such as challenges to the will’s validity, more court time may be necessary.
It is important to note that being an executor of an estate can be a major responsibility, and the person chosen should be trustworthy, responsible, organized, and diligent. The executor must act in the best interest of the estate and its beneficiaries.
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Probate
In the US, a deceased person's bank account is inaccessible unless you are a joint owner, a beneficiary of the account, or the estate executor. If the account has a payable-on-death beneficiary, the bank account balance goes to the beneficiary after the last account owner dies. The beneficiary can claim the funds by contacting the bank and providing a death certificate.
If there is no joint owner or beneficiary, the account becomes part of the deceased owner's estate and is settled during probate. The court oversees the distribution of assets according to the deceased's will or special laws in the absence of a will. The bank account will be frozen until the probate process is complete.
The complexity of the probate process can depend on various factors, including the nature of the account and whether there is a designated beneficiary. For example, if the beneficiary dies before the account owner or cannot be located, the account may have to pass through probate. Similarly, if there is a dispute around a beneficiary's right to the account, probate may be required.
In some cases, an ancillary probate may be necessary for the disposition of real property and tangible personal property located in a foreign jurisdiction. This is more common in non-"forced heirship" jurisdictions, where assets pass according to statute rather than a will.
It is important to note that a Power of Attorney (POA) cannot be used to close a bank account after someone passes away as a POA expires once the principal (the person granting authority) dies. Instead, the person named as Power of Attorney will need to be named as the executor of the estate or petition to become the administrator.
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Closing the account
Closing a deceased person's bank account is not always a straightforward process, but with the right documentation, it can be done. Here are the steps to follow:
Identify the Account Type
Firstly, it is important to identify the type of account held by the deceased person. The process for closing the account will vary depending on whether it is a joint account, a payable-on-death account, or an individual account.
Joint Account
If the deceased person held a joint account with another person, the surviving owner retains ownership of the account and can continue using it as normal. In this case, the joint owner does not need to close the account.
Payable-on-Death Beneficiary
If the deceased person designated a payable-on-death beneficiary, the beneficiary can claim the funds by contacting the bank and providing a death certificate. The beneficiary can then decide to close the account if they wish.
Individual Account
If the deceased person held an individual account with no joint owners or beneficiaries, the account becomes part of the deceased owner's estate. In this case, the legally designated executor can collect the funds and place them into an estate account.
Executor Access
For an executor to access the account, they must provide proof of their executor status and a certified copy of the death certificate. If there is no will or no executor named in the will, a relative or legal representative must request permission from the probate court to close the account. The court will issue a Letter of Testamentary or a Letter of Administration, which should be presented to the bank along with the death certificate to close the account.
Trustee Access
If the deceased person set up a living trust, the checking account may be held in the name of the trust. In this case, the successor trustee should notify the bank of the initial trustee's death and provide a certified copy of the death certificate and the Certificate of Trust naming the successor trustee. The bank will then provide forms to be filled out to close the account.
It is important to note that Power of Attorney (POA) cannot be used to close a bank account after someone passes away, as POA expires upon the death of the principal.
While the process for closing a deceased person's bank account can be complex, working closely with a probate attorney can help ensure that beneficiary rights are upheld and any disputes are resolved.
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Frequently asked questions
Only joint owners, beneficiaries, or executors can access a deceased person's bank account.
If there is no joint owner, beneficiary, or executor, the account becomes part of the deceased owner's estate. The legally designated executor can then collect the funds and place them into an estate account.
The joint owner, beneficiary, or executor must provide a copy of the death certificate when taking action on the owner's account. If there is no will or executor named in the will, a relative or legal representative must request permission from the probate court to close the account.
If the bank isn't informed of the owner's passing and the account goes dormant, the account may be subject to escheatment, which turns the funds over to the state government.
The complexity of this process depends on the nature of the account and whether you've been granted legal authority to manage the account. While the process can be straightforward, it is recommended to work closely with a probate attorney to ensure your beneficiary rights are upheld.
