What Happens to Bank Accounts?
What Happens to Bank Accounts After a Death Has Occurred
Understanding what happens to bank accounts when someone passes away can help families navigate this difficult time with greater confidence and less stress. This guide explains the bank notification process, account freezes, and steps you can take now to protect your loved ones later.
How Banks Learn of a Death
Banks typically learn that an account holder has died through one of several channels:
Direct Family Notification
Most commonly, the family, executor, or next-of-kin contacts the bank directly. You’ll typically need to provide:
- A certified copy of the death certificate
- The decedent’s full legal name
- Account numbers
- Social Security number
Indirect Notification
Sometimes banks are alerted through other means:
- Social Security Administration (SSA) reports
- Obituary listings
- State “unclaimed property” databases
Once notified through any channel, the bank’s internal processes begin.
What Banks Do When Notified
Account Freeze or Hold
Upon notification of death, banks typically place a freeze or hold on the decedent’s accounts. This is a standard protective measure designed to:
- Prevent fraud and unauthorized transactions
- Protect against confusion about account ownership
- Ensure proper legal transfer of funds
Important to understand: An account freeze is not the bank “taking away” the money. It’s a temporary protective step while the bank verifies who has the legal right to access or distribute the funds.
Documentation Requirements
Before releasing or transferring funds, banks typically require:
- Certified death certificate
- Proof of identity for the surviving joint owner or executor/administrator
- Court-issued letters of testamentary (if the estate is going through probate)
How Accounts Are Handled
What happens next depends entirely on how the account was structured:
- Joint accounts with right of survivorship: The surviving owner typically gains full access once proper documentation is submitted
- Accounts with Pay-on-Death (POD) or beneficiary designations: Funds transfer to the named beneficiary relatively quickly
- Sole ownership accounts (no joint owner or beneficiary): The account becomes part of the estate and must go through probate, which can delay access
- Trust accounts: Handled according to the trust documents
Understanding Account Freezes
The freeze period can be especially challenging because bills continue to arrive, funeral and memorial costs need to be paid, and creditors may have claims against the estate.
For Surviving Spouses or Joint Account Holders
Even if you are a joint owner, the bank may require paperwork before releasing funds. The freeze is typically temporary, but planning ahead can minimize delays. With proper documentation, joint account holders usually regain full access relatively quickly.
For Sole Owner Accounts
If an account was solely held by the decedent with no beneficiary designation and no joint owner, the account becomes part of the estate. During probate, access to funds may be paused, delaying bill payments and distributions.
Steps to Take Now to Protect Your Family Later
1. Ask Your Bank About Their Policies
Contact your bank and ask: “If an account holder dies, how does the bank handle notification, freeze, release, or change of ownership?” Understanding your bank’s specific policies ahead of time helps avoid surprises during an already difficult period.
2. Ensure Clear Account Ownership
Review how your accounts are structured:
- Is it a joint account with right of survivorship?
- Is your spouse or a trusted individual listed as a joint owner?
- Are beneficiaries clearly designated?
When a bank is notified of death, a surviving joint owner typically becomes the legal owner automatically once documentation is submitted, helping to avoid prolonged freezes.
3. Consider Pay-on-Death (POD) Beneficiaries
If you don’t have joint account holders, consider naming a payable-on-death beneficiary. This designation tells the bank in advance who should receive the funds, significantly speeding up the release process and avoiding probate for those accounts.
4. Keep Certified Death Certificates Ready
Your surviving spouse or executor will need certified copies of the death certificate to verify the death and release or transfer funds. Mount Sinai handles the filing process and can help you determine how many copies you’ll need.
5. Plan for Immediate Expenses
For surviving spouses who will need to handle ongoing bills, funeral and memorial costs, and cemetery or mortuary obligations, having joint accounts or beneficiary designations means quicker access to needed funds rather than waiting for the estate process to complete.
Critical to know: Power of attorney arrangements generally end at death. They cannot be used to access or manage accounts after the account holder passes away. Banks will not allow access based on a POA alone once death has occurred.