Losing someone close to you is hard enough without having to untangle their financial affairs at the same time. One of the questions families ask us most often is what actually happens to a bank account once someone has died. The answer isn’t always straightforward, but it usually comes down to three things: whether the account was held solely or jointly, how much money is involved, and whether a Grant of Probate or Letters of Administration is needed.
A situation that we come across on a regular basis is that a family contacts us believing that Probate will automatically be required because the deceased had money in several bank accounts. However, each bank has its own requirements. One bank may be prepared to release its funds without a Grant, while another may require Probate. We therefore look at the estate as a whole before advising whether a Grant is actually needed.
We also find that there can be a misunderstanding around Lasting Power of Attorneys (LPAs). We had a son and daughter who had been managing their parent’s finances under a LPA and assumed they could continue accessing the account after death. We explained that the LPA ended when the parent died and they had to deal with the bank in their capacity as executors.
Here at Boyletts Law, we help families through this process every week, so we’ve set out below what usually happens to a deceased person’s bank account, and the steps executors and family members are likely to need to take.
What happens to a bank account when someone dies?
If the account was held in the deceased person’s sole name, the bank needs to be told about the death as soon as possible. Once it has been notified and carried out its checks, the bank will usually restrict or freeze the account, meaning money cannot be withdrawn as normal.
This isn’t the bank being difficult; it’s there to protect the deceased person’s money while their estate is sorted out. That money now forms part of the estate and will be dealt with by the executors or administrators in due course.
How do you notify a bank of a death?
Every bank has slightly different requirements, but you should expect to be asked for:
- the deceased person’s full name, address and date of birth;
- details of the account;
- a copy or certified copy of the death certificate;
- details of the executors or next of kin; and
- in due course, a Grant of Probate or Letters of Administration, if one is needed.
Once the bank has this information, it should be able to confirm the balances held and tell you what it needs before any funds can be released. These figures also matter when working out the value of the estate for inheritance tax and probate purposes.
Can you take money out of a deceased person’s bank account?
No — you shouldn’t continue using a deceased person’s bank card, PIN or online banking after their death, even if you had their permission to use it while they were alive.
If someone held a Power of Attorney for the deceased, it’s worth remembering that this authority ends the moment the person dies. From that point, responsibility for the estate passes to the personal representatives named as executors, or appointed as
administrators.
Do you need probate to close a bank account?
Not always. Whether a Grant of Probate is required depends on the assets in the estate and the particular bank’s own rules and thresholds.
Some banks are willing to release funds and close an account without a Grant, particularly where the balance is relatively modest. Where larger sums are involved, or other assets in the estate require a Grant, an application for Probate is likely to be necessary. It’s best not to assume either way just because the deceased held a bank account — every estate is different.
What happens to a joint bank account when someone dies?
Joint accounts are usually treated differently from accounts in a sole name. In most cases, the account simply continues in the surviving account holder’s name rather than being frozen.
That said, things can be more complicated depending on how the money in the account was owned and the circumstances behind the arrangement. The deceased’s share of a joint account may also need to be factored into the estate and any inheritance tax position. If there’s any doubt about who really owned the money, it’s worth getting legal advice before the estate is distributed.
Can funeral expenses be paid from a frozen bank account?
Often, yes. Even where an account has been frozen, many banks will pay certain expenses directly from it before Probate is granted, and funeral costs are usually top of that list. Some banks can also pay inheritance tax directly to HM Revenue & Customs.
The bank will typically want to see the relevant invoice, and will pay the biller directly rather than releasing money to the family.
What happens to direct debits and standing orders after a death?
Once a bank is told about a death, payments from a sole account may stop. It’s worth executors making a list of regular payments connected with the deceased’s home, insurance, utilities and other commitments early on.
Some of these need to keep running while the estate is being administered, particularly if a property is being maintained or sold, so it pays to think carefully before cancelling insurance or other services tied to estate assets.
What happens to the money once probate is granted?
Once a Grant of Probate or Letters of Administration has been issued, the personal representatives can provide it to the bank, which can then close the deceased’s accounts and release the funds — usually into an account being used to administer the estate.
The money doesn’t go straight to the beneficiaries at this point. Before anything is distributed, the personal representatives need to establish the full assets and liabilities, deal with any tax due, settle debts and administration expenses, and make sure the estate is shared out correctly under the Will, or under the intestacy rules if there isn’t one.
What if you can’t find all of the deceased’s bank accounts?
It’s more common than you might think for families to be unsure exactly where a loved one held their savings or investments. Executors are expected to make reasonable enquiries to track down the deceased’s assets, which can involve going through paperwork, correspondence, tax records and other financial information.
It’s worth taking the time to establish the full picture of the estate before finalising the administration and distributing anything to beneficiaries.
Do you need help dealing with deceased bank accounts and probate?
Dealing with banks is only one part of administering an estate. Executors may also need to value property and investments, work out inheritance tax, apply for a Grant of Probate, settle debts, deal with the sale or transfer of property, and distribute the estate to beneficiaries.
At Boyletts Law, we can help with as much or as little of the Probate and estate administration process as you need — whether that’s a bit of advice about obtaining Probate, or handling the whole administration on your behalf.
If you’d like to talk through what’s involved, get in touch with our Probate team on 01279 295047, or complete our enquiry form. We help clients in Sawbridgeworth, Harlow, Bishop’s Stortford and the surrounding areas, as well as further afield.