What Happens to My Bank Account When I Die?


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What happens to your bank account when you die will depend on what type of bank account it is, how you set up the account, and whether you have a will.

When the owner of a bank account dies, the transfer process is fairly straightforward if the account has a joint owner or named beneficiary. Otherwise, the account becomes part of the deceased owner’s estate and is settled during probate.

Understanding what happens to your money after you die can help you manage a bank account after losing a loved one, and also prompt you to set up your accounts in a way that minimizes complications for your survivors down the line.

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How Do Banks Discover When Someone Died?

There are two main ways a bank discovers when an account holder has died:

  • Family member or beneficiary Commonly, a family member will let the bank know when one of their bank account holders has died. To inform a bank about the death of a loved one, you’ll need to present a copy of the death certificate, the deceased person’s Social Security number, and proof that you can act on behalf of the estate (such as ID showing you are the account’s joint owner or beneficiary or Letter of Testamentary to show your executor status).
  • Social Security Administration Funeral directors usually report the death of a person to the Social Security Administration to ensure no more Social Security checks are issued to that individual. If any checks were sent after the person’s death, Social Security will contact the bank to get the payment returned. This is another way a bank may learn about the death of an account holder.

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Sole Owner Bank Account Rules on Death

What happens to a deceased person’s bank account if they were the sole owner of the account will depend on whether or not the account has a payable on death (POD) beneficiary.

If there is a beneficiary named, the money in the account goes to the beneficiary after the sole account owner dies. Regardless of whether there’s a will and what’s in the will, the beneficiary automatically inherits the designated account’s funds upon the account owner’s death.

A beneficiary can claim bank account funds by contacting the bank and providing valid ID and a death certificate. The bank will typically then release the funds to that person and close the account. If the beneficiary is a minor when the account owner dies, someone must be appointed to manage the money on the minor’s behalf.

What happens if no beneficiary is named on a bank account? If the sole owner of a bank account dies and no beneficiary was named, the account becomes part of the deceased person’s estate (which is the sum total of the assets the person left behind). The money is then settled during probate.

Probate is the legal process for distributing a dead person’s assets, often as outlined in their will, as well as settling their remaining debts.

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Joint Bank Account Rules on Death

In most cases, the surviving joint owner of a joint bank account will have automatic rights of survivorship, which grants them ownership of the entire account balance. That person can typically continue to use the checking or savings account without any interruptions.

However, the surviving account holder will still need to contact the bank and provide a death certificate or other documentation to confirm the death and update account records. Banks generally have a process you need to follow upon an account owner’s death. The surviving joint account holder may be able to remove the deceased from the account or open a new individual account.

What Happens if No Beneficiary Is Named on a Bank Account?

If the deceased person is the sole owner of the bank account and did not name a beneficiary, the executor of the deceased’s will is typically responsible for handling any assets in their estate (including money in bank accounts).

The executor will typically transfer funds contained in the bank account into an account in the name of the decedent’s estate, and they may be able to access those funds to satisfy the decedent’s debts and pay probate costs. They will then distribute any remaining funds to those named in the will.

If there is no will to name an executor, the state appoints one based on local law. After paying off any debts, the named executor will distribute the money according to local inheritance laws.

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Tips to Avoiding Complications Upon Death

There are some simple steps you can take now to make it easier for your loved ones to sort out your affairs and access your bank accounts after you die. Here are some to consider.

  • Add a joint owner. Naming a spouse or other family member as a joint account holder is a simple way to ensure someone has access to the money when you die. In most cases, the joint account holder can simply take over the funds.
  • Set up beneficiary designations. Most financial institutions make it easy to name a POD beneficiary on your bank accounts. Taking a few minutes to name one can mean less headaches for your loved ones down the road. Unlike a joint owner, a beneficiary cannot access the account while you’re alive.
  • Write a will. Having a will still means your assets will need to go through the probate process before they can be distributed to your loved ones. But at least it ensures that the money will go to the intended person.
  • Set up a living trust. A well-set-up trust can mean that your assets don’t have to go through probate. Instead, the money can go to your heirs in a more timely manner. However, trusts can be costly to set up and maintain, and may not be worth it if you have a simple estate with few assets and potential heirs.
  • Consolidate bank accounts. To make it easier for your loved ones to sort through your finances, consider streamlining your accounts. Too many checking and savings accounts, especially if the accounts are held at different banks, can make settling your affairs complicated and time consuming. Consolidating your accounts also helps ensure that no account gets forgotten.

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The Takeaway

The easiest way to pass the money in your bank account to your loved ones is to name them as joint account holders or POD beneficiaries. Setting up a will is also an essential step in estate planning, but it may not guarantee that your loved ones will be able to access your bank accounts quickly.

Regardless of your choice, it’s a good idea to make some smart money moves now to make life easier for your loved ones while they are grieving.

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

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