What happens to a bank account when someone dies? Deceased estate questions answered

As a company that works with bereaved families every day, it’s become clear to us that one of the most under-appreciated and stressful tasks involved in saying goodbye to a loved one is administering their estate, particularly in the early days after their passing.

The loss of a family member or close friend can be overwhelming in any circumstance, but being appointed executor or administrator of their estate places an extra burden and adds complexity to what already is a tough time. If you find yourself in this situation, some of the first issues you’re likely to encounter will involve your loved one’s bank accounts.  To support you through what can be a difficult process to tackle while mourning, we’ve put together simple answers to the most common questions we receive about bank accounts of the deceased.

What happens to bank accounts when someone dies?

The bank or financial institution that holds a deceased person’s accounts will often freeze accounts where they were the sole account holder, as soon as the bank is notified of the death – usually by the executor or next of kin. This is to prevent further transactions, ensuring any funds held within the estate are protected. Any joint bank accounts held by the deceased will continue to operate as normal, and accounts where the method of operation was ‘both to sign’ will usually continue to function but require only one signature going forward.

The accounts held solely by the deceased will eventually be closed, but this can can take some time. That’s because any credit card debt or personal loan must be repaid from the deceased’s accounts, and any money held in the accounts be paid out to benefactors and the rest of the estate distributed in line with the instructions set out in the will.

How can I access a deceased estate account?

As executor or administrator, to obtain access to the deceased’s bank account, their bank will likely need you to provide original versions or certified copies of the death certificate, the current will (if one existed) and the deeds of any trusts the deceased held. Depending on the value of the estate, you may also need a grant of probate (if there is a valid will) or a letter of administration (if there is no valid will).

Each bank’s requirements may differ slightly but most banks have information available online to direct you to their department or team that handles deceased estate accounts, which will talk you through that institution’s specific process. Once a bank is notified of a death, it will typically freeze the deceased’s accounts, as mentioned above, but will also usually be happy to provide on request a list of regular payments made from the account so you can arrange to cover bills or stop future debits.

What can be paid out of a deceased estate account?

When someone passes away, there will often be unexpected related expenses and it can often take months for someone’s estate to be administered and funds become available from the deceased’s accounts. However, the bank or financial institution used by the deceased will often agree to release funds held by the deceased early in order to cover funeral costs and other expenses related to the estate.

An executor, next of kin or administrator can arrange such such payments with the bank itself, and, as mentioned above, can usually also request that specific existing payments continue to be made from the bank account, such as, for example, regular bills incurred by the deceased’s property.

There’s also the option of setting up an ‘estate of the late’ transaction account with the bank, which will enable the executor to access money from the estate to cover estate expenses. The bank can also release funds to cover business expenses the deceased may have had, upon request from the executor or next of kin, company director, chairman secretary or treasurer, or a trustee.

How do I pay for a funeral from a deceased person’s bank account?

Your loved one may have already made arrangements for their funeral, which may be noted in their will. If they purchased a prepaid funeral, you can contact the provider direct to inform them that your loved one has passed away and to engage their services. If the deceased purchased a funeral bond or funeral insurance, you’ll need to contact the company to organise the release of funds for funeral expenses.

If there are no funeral arrangements in place, however, the executor, administrator or next of kin are typically tasked with organising the deceased’s funeral.

To pay for a funeral from a deceased person’s bank account while the account is frozen as described above, as executor or administrator, you’ll need to contact the bank to request release of funds for this purpose. These monies can be paid to yourself as executor or administrator acting for the estate or to the person who organised or paid for the funeral with their own money. You’ll need to provide the bank with an invoice or receipt for the funeral service, however.

The first week after a loved one has passed is such an emotional period, not every family opts immediately for large and expensive funeral ceremony. (I know this because my funeral company, Bare Cremation, offers unattended, direct cremations that allow more time for families to organise a more tailored send-off in the weeks or months down the track.) But if you are organising a funeral service soon after your loved one has passed, funeral directors will generally require services to be paid for at the time of the funeral, which will likely be well before the estate is released.

Some funeral costs may need to be paid before the funeral itself takes place, so it’s important that you’re aware of whether these upfront costs can be covered by a family member or friend of the deceased or, if not, that you will need access the deceased’s accounts quickly.