What happens to a bank account if a person dies?

What happens to a bank account if a person dies?

What happens to a bank account if a person dies? In principle, there is no procedure for banks to know that a person has died, so if there are no movements in the account after six years, the money in the accounts goes to the public charity.

In this situation, family members may be affected by the way the deceased set up their bank accounts.

Sole owner of an account

Banks allow their customers to name a beneficiary. In this case the bank will deliver the funds to the named person upon learning of the account holder’s death. The bank then generally closes the account.

If the deceased did not name a beneficiary, the process can become complicated. The person who administers a person’s estate when he or she dies(executor) will be responsible for dividing the funds according to the decedent’s will.

Joint or pooled accounts

If one of the account signatories dies, the other signatory retains ownership of the money in the account. This means that you can continue to use the account and the money it contains.

Even so, if you are a signatory on a joint account, it is worth checking with your bank to make sure you do not have any problems in the future. Some banks will freeze this type of account if one of the signatories dies, which could be a problem if you use the account for regular expenses.

When someone dies without a will

If someone dies without a will, the money in his or her bank account will still pass to the beneficiary. If someone dies without a will and without naming a beneficiary, things get complicated.

The executor must use the funds in the account to pay creditors of the estate and then distribute the money in accordance with local inheritance laws.

In most states, most or all of the money will go to the decedent’s spouse and children.

How does a bank find out that someone died?

If a loved one has passed away, inform the bank by bringing a copy of their death certificate, social security number, any other official documents and a court document that gives someone legal power of attorney to act on behalf of the estate (executor).

Informing the bank allows you to begin the process of distributing the funds and closing the account.

How to avoid complications

• Always have a will drafted by an attorney and establish beneficiary designations.
• Have an authorized signer on the account to make the process easier.
• If you have a power of attorney from a loved one who has health problems, you can add a joint account holder in preparation for the future.
• Make sure your family is aware of all your financial accounts.
• Consolidate your accounts as much as possible.

Making basic preparations with your finances can help your loved ones from financial stress as they grieve your loss. Have an attorney draft a will to describe your final wishes.