What Happens to a Deceased Person’s Bank Account?

When a bank account holder passes away, handling their accounts involves a process influenced by the account type and ownership structure. Understanding this process is important for those managing the deceased’s affairs, ensuring proper fund distribution and legal compliance.

Immediate Actions and Necessary Documentation

Notifying the bank promptly about the account holder’s death is the first step. Financial institutions require information like account numbers and the date of death to secure assets and confirm ownership or beneficiary designations.

To initiate any process, specific documents are required. A certified copy of the death certificate serves as official proof of death; multiple copies are often needed for various institutions. If the deceased had a will, it names an executor or personal representative authorized to manage the estate. The individual acting on behalf of the estate or as a beneficiary must also provide government-issued identification for verification.

How Account Ownership Affects Access

The way a bank account is owned determines how funds are accessed after the owner’s death. Different account structures have distinct legal implications for asset transfer.

Accounts held solely in the deceased person’s name are individual accounts. Funds in these accounts become part of the deceased’s probate estate, requiring a court-supervised process for access and distribution. The bank releases funds only to the legally appointed representative of the estate.

Joint accounts are owned by two or more individuals, often with “rights of survivorship.” When one account holder dies, the surviving owner assumes full ownership of the funds without probate. If a joint account is “tenants in common,” the deceased’s share becomes part of their estate and is distributed according to their will or state law, not automatically transferring to the surviving co-owner.

Accounts designated as Payable-on-Death (POD) or Transfer-on-Death (TOD) have a named beneficiary who can claim funds directly upon the owner’s death. This designation functions as a contractual agreement with the bank, allowing assets to bypass probate entirely. POD designations are for bank accounts, while TOD is for investment accounts.

Funds held within a trust are managed by a designated trustee according to the trust document. Since the trust owns the assets, these funds do not go through probate upon the grantor’s death. The trust document dictates how and when assets are distributed.

Steps to Release Funds

Once documentation is gathered and ownership understood, specific procedures facilitate fund release. The method for accessing money varies based on how the account was established.

For individual accounts, access to funds requires formal court authorization. The executor named in a will must obtain “Letters Testamentary” from the probate court, or an administrator must secure “Letters of Administration” if there is no will. These court-issued documents confirm legal authority to act on behalf of the estate, and the bank verifies them before releasing funds. For smaller estates, a small estate affidavit may provide a simplified alternative to full probate. This sworn statement, filed with the probate court, allows heirs or beneficiaries to claim property directly from the bank without extensive court proceedings, provided the estate value falls below a state-specific threshold. A small estate affidavit requires a waiting period, 30 to 45 days after death, before it can be presented to the bank.

For joint accounts with rights of survivorship, the surviving owner presents a certified copy of the death certificate and government-issued identification to the bank. The bank updates the account title by removing the deceased’s name, granting the survivor full control and access to funds.

When an account has a Payable-on-Death (POD) or Transfer-on-Death (TOD) designation, the named beneficiary can claim funds directly. The beneficiary needs to present a certified death certificate and personal identification to the bank. Providing the deceased’s Social Security number can also assist the bank in verifying account and beneficiary details, after which the bank releases the funds.

For funds held in a trust account, the successor trustee manages assets according to the trust document’s instructions. The trustee presents the trust document and death certificate to the bank. The bank verifies the trustee’s authority, enabling them to manage or distribute funds to beneficiaries as specified in the trust’s terms.