Here’s What Happens to Your Bank Account After You Die

Dealing with the death of a loved one is never easy. But when someone dies, there are often a lot of complex financial matters to attend to. If there is confusion or unclear instructions about how to manage bank accounts after a death, it can lead to additional emotional pain for surviving loved ones.

Even if you don’t have a large amount of money to pass on to loved ones, even if you haven’t written a will or made an estate plan, you can help reduce stress and confusion for your family and heirs by making a clear plan for what happens to your bank accounts after you die.

Let’s look at a few common situations that everyone should know about to help handle bank accounts in case of an untimely death. Knowing what happens to your bank account after you die can help you have peace of mind and give financial protection to your loved ones.

Joint bank accounts with rights of survivorship

What happens to your bank account after you die will be based on the type of bank account ownership category. If you have a joint checking account, for example, many banks have rights of survivorship clauses built into the account.

So if two spouses have a joint account together, and one spouse dies, the other spouse can continue using their joint checking account to pay bills. Rights of survivorship is an easy way to make sure that, if one person on a bank account dies, the other person automatically assumes ownership of the account without interruption.

Read your bank’s deposit account agreement for details, or call your bank’s customer service team and ask if your joint checking account, or other jointly owned bank accounts, have rights of survivorship.

Designate a beneficiary for “pay on death” (POD)

If you don’t have a joint bank account with rights of survivorship, you might need to take extra steps to make sure your money goes to the right person (or people) after you die. Some bank accounts let you set up your account to have a designated beneficiary. These are often called “pay on death” (POD) or “transfer on death” (TOD) accounts.

You can often select multiple beneficiaries on your bank account. In case you die, you can ask for the money to be transferred to one other person of your choice, or a few people with different percentages that you select. POD and TOD bank accounts typically can bypass the probate process — naming someone as your bank account beneficiary helps them get the money quickly after your death, without having to go through court proceedings.

Providing the bank with legal paperwork after death

Whenever a bank account customer dies, the bank needs to be formally notified of the death. The bank will want to get a copy of the account holder’s death certificate, and the bank will review the account to see if it has a joint account holder with survivorship rights, a designated beneficiary for payment or transfer on death, or if there are other rules and procedures to follow for the account.

If you are serving as the executor or administrator of an estate, the bank will need you to provide paperwork showing that you have the legal authority to make decisions for the deceased person’s bank account and other financial assets.

If there is a will, the bank can help the executor pay the deceased person’s final expenses, settle debts, and distribute funds from any bank accounts to the designated beneficiaries and heirs in the will. If there is no will, the bank account must be managed and distributed to next of kin according to the laws of succession for the state.

Bottom line

Whenever a person dies, it’s important to have a will or an estate plan in place to outline clear next steps and instructions for how to pass on the deceased person’s bank accounts and other assets. If there is no will, your bank account might end up going through a time-consuming probate process that can result in complexity and added costs for your loved ones.

Even if you don’t have a lot of money or don’t think you need a will, paying attention to who is set up as a designated beneficiary on your bank accounts can help simplify life for your loved ones. Deciding who gets to inherit your bank account in case of your death can be a useful way to set intentions and provide clarity and peace to others after you’re gone.