Whether you're worried about what will happen to your money, or someone close to you has passed away, it is important to know what happens to bank accounts when someone dies. There are processes in place to help make this difficult time run a little easier, regardless of whether there is a will involved or not.
In the event of death, the deceased's bank accounts are closed by the bank. Before that, any remaining money will be paid out in line with what was requested in their will, which is a legally binding document outlining who gets the deceased's assets following death.
If there is no will, ownership of the account and its assets will be transferred to the next of kin or estate administrator. It's important to note that any credit card debt or personal loan debt will be paid from the deceased's bank and savings accounts before the account administrator takes control of any assets.
If you don't yet have a will created, you can get started making a will on the Service NSW website online.
If someone you know has passed away, one person will need to be nominated as the executor of the will. They will need to contact the bank to start the process of settling the deceased's bank accounts.
The bank will then send a letter advising of next steps. But before the deceased's estate can be settled and their bank accounts closed, the financial institution needs documents showing proof of death, and identification from the next of kin proving their authority over the deceased's estate.
The following documents must be provided before the financial institution can close or transfer ownership of the account(s):
Some financial institutions will accept the following, or a combination of the following documents as proof of death:
If the deceased has not left a will, a spouse or next of kind can apply for a Probate/Letter of Administration from the state or territory's Supreme Court. As an estate administrator, this person will be responsible for collecting all the assets, paying any debts, and then distributing assets to the beneficiaries.
The Probate/Letter of Administration needs to be provided to the financial institution along with the death certificate.
Once the financial institution has all the information it needs to satisfy its requirements, if the account is held solely in the name of the deceased, account access is restricted, a certificate of balance is issued, the money will be paid out, and the account is closed.
What happens to joint bank accounts?
If the bank account is held jointly, ownership of the account will be transferred to the other primary account holder. The account will continue to function as normal.
What happens to credit card debt?
If the deceased has credit card debt or personal loan debt, the balance of these debts will be paid from the deceased’s transaction and savings accounts before the funds are released.
What happens to term deposits?
A term deposit investment can be released before the date of maturity once the financial institution gets all the necessary paperwork, declaring the person has passed away. Fees and charges are waived and any interest owed on the investment is paid.
What happens to my home loan if I die?
To find out what happens to your home loan in the event of your death, we suggest you read our guide on this topic.
How long does it take for an account to be settled and closed?
Financial institutions advise that each case is different. We suggest you contact your financial institution for further information.
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Hi,
My dad died about two weeks ago and he didn’t leave a will and now the account is ceased.
Hi Jay,
Thank you for getting in touch with Finder and sorry to hear about your loss.
Since there is no will, ownership of the account and its assets will be transferred to the next of kin or estate administrator. I suggest that you seek professional advice from a lawyer on this matter.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
My father was passed away 16 months ago,
I disturbed so much, and i never had a thought of account holder can also get accidental death insurance from bank as he had a account holder and ATM debit card holders,
Can u please guide me, hiw to claim, how can i get it now a insurance amount.
Hi Sai,
Thank you for reaching out to Finder.
First, you would need to contact the bank where your father has an account and inform them of what happened. Second, they may require you to submit documents that evidence what happened. Hope this gets you started.
Cheers,
Reggie
My mom passed away many years ago..as you can imagine at the time i was distraught,and never gave a thought to her account..just recently I moved and found all her old cancelled checks..so I decided to find out about her account..When I looked up the bank I couldn’t find it..I believe it has closed down..How do I find out what happened to my mom’s account,or money she may have had left?
Hi Becca,
Thanks for getting in touch with finder. I hope all is well with you. :)
Generally, your mom’s account will be closed and then any remaining money will be paid out according to your mom’s will. If in case there’s no will, the fund will be given to the next of kin or estate administrator.
What you can do is directly get in touch with your mom’s bank. They should be able to tell you more details about your mom’s account.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
My parent has just passed and had more than 50,000 in the account anything over the 50,000 is their tax or anything that has to be paid on the rest of the money?
Hi Julie!
Thanks for your message and for contacting finder.
Sorry to hear about your parents passing. There are no taxes involved in regards to a deceased bank account. Normally, when an owner of a bank account passes, the financial institution would need documents as stated above and will process to close the bank account provided there are no arrears or pending payments. Should there be any, those will need to be paid off and the remaining amount will be transferred to the deceased nearest kin.
Hope this helps! Feel free to message us should you have any questions.
Regards,
Nikki
Does a bank has to pay interest for the frozen money of a deceased person?
Hi El,
Thank you for leaving a question.
The bank will pay interest on a bank account up until the date of death of the account holder. After notification has been received about the death, the account will be frozen while waiting for direction from the authorized court regarding payment to heirs and creditors or until the last will has been reviewed and has been acted on. Hope this helps!
Cheers,
Reggie