What Happens to Bank Accounts When Someone Dies?
When someone dies, their bank accounts are typically among the assets that need to be dealt with. Executors and heirs often wonder what happens to these accounts and how they can access the funds. In this article, we’ll explore what happens to bank accounts when someone dies and what you need to know as an executor or heir.
Probate and Non-Probate Accounts: The Benefits of Naming a Beneficiary on Bank Accounts
The first thing to understand is that not all bank accounts go through probate. Probate is the legal process of administering a deceased person’s estate, and it typically involves validating the will, identifying the deceased person’s assets, paying their debts, and distributing their remaining assets to their heirs. However, some bank accounts are considered “non-probate” assets, which means they can be transferred directly to the named beneficiary outside of probate.
If the deceased person had a joint bank account with a spouse or other individual, the account typically passes to the surviving account holder(s) outside of probate. The surviving account holder(s) will need to provide a death certificate and proof of identity to the bank in order to gain access to the account.
Payable-on-death (POD) accounts are bank accounts with a named beneficiary who will receive the funds upon the account holder’s death. These accounts are considered non-probate assets and can be transferred directly to the named beneficiary without going through probate. The beneficiary will need to provide a death certificate and proof of identity to the bank in order to gain access to the funds.
Transfer-on-death (TOD) accounts are similar to POD accounts, but they are typically used for investment accounts rather than bank accounts. Like POD accounts, TOD accounts are considered non-probate assets and can be transferred directly to the named beneficiary upon the account holder’s death.
Some bank accounts are inheritable, which means that they can be transferred to the deceased person’s heirs outside of probate. In order to transfer an inheritable account, the executor will need to provide a death certificate and proof of identity to the bank. The bank will then transfer the account to the designated heirs according to the deceased person’s will or state law.
Closing the Account:
If the deceased person did not have a joint account holder, named beneficiary, or designated heir, the executor will need to close the account as part of the probate process. The funds in the account will be used to pay the deceased person’s debts and distributed to their heirs according to their will or state law.
In conclusion, what happens to bank accounts when someone dies depends on the type of account and whether it is considered a probate or non-probate asset. Executors and heirs should work with the bank and seek legal guidance if necessary to ensure that the accounts are properly transferred or closed according to the deceased person’s wishes and the law.
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