Who Has the Authority to Close a Bank Account?

Understanding who has the authority to close a bank account is important for consumers and those managing financial affairs. This authority can stem from the account holder, designated third parties, or the financial institution itself.

Closing Personal Accounts

An individual account holder has the exclusive right to close their personal bank account. The process generally requires the account number and valid government-issued photo identification. Before closure, confirm all outstanding transactions have cleared and transfer any remaining balance. Banks may require a zero balance.

For joint accounts, the authority to close depends on the bank agreement. Many joint accounts are “either/or,” allowing any one holder to initiate closure. “And” accounts require consent from all account holders. Review your account agreement or contact your bank for specific requirements. Obtaining written confirmation of closure is recommended.

Closing Accounts Through Third-Party Authority

When an individual cannot manage their own financial affairs, specific legal mechanisms allow designated third parties to close bank accounts. One common arrangement is a Power of Attorney (POA), which grants an agent the authority to act on behalf of the principal. To close a bank account using a POA, the agent must present the original POA document and their own valid government-issued identification. The POA document must explicitly grant the power to close bank accounts or terminate banking relationships; without this specific language, banks may not honor the request. It is important to note that a Power of Attorney generally expires upon the death of the principal, meaning the agent’s authority to act on the account ceases at that time.

Death of Account Holder

In the event of an account holder’s death, an executor or administrator of the deceased’s estate assumes authority to manage and close accounts. Documentation includes a certified copy of the death certificate, Letters Testamentary (if there is a will) or Letters of Administration (if there is no will), and the executor’s or administrator’s identification. Funds from closed accounts typically become part of the deceased’s estate, distributed according to legal processes.

Guardians and Conservators

Guardians or conservators are appointed by a court to manage the financial affairs of minors or incapacitated adults. Their authority to close bank accounts stems from a court order. They must present certified copies of these court orders along with their identification to the financial institution. In-person visits to the bank are often required for these third-party initiated closures.

Bank Initiated Account Closures

Financial institutions can also initiate the closure of a bank account without the customer’s direct request. A primary reason is prolonged inactivity or dormancy. If an account remains unused for an extended period, it may be flagged as dormant. Banks often attempt to notify the account holder before closure; if unsuccessful, funds may be escheated to the state as unclaimed property.

Reasons for Closure

Other common reasons for bank-initiated closures include repeated negative balances or excessive overdrafts. Banks may also close accounts due to suspicious or fraudulent activity, such as unusual transaction patterns, large transfers from unknown sources, or suspected money laundering. Violation of the bank’s terms and conditions, such as using a personal account for business purposes against policy, can also lead to closure. In some instances, legal orders or garnishments may compel a bank to close an account.

Funds After Closure

While banks have the right to close accounts based on their discretion and policies, they often adhere to internal procedures and may or may not provide prior notice depending on the reason for closure. Any remaining funds in a closed account are typically returned to the account holder, often via a check mailed to the last known address, or through the escheatment process if the customer cannot be located.