Personal finances are an integral part of our lives, even in circumstances that involve death. Knowing what happens when the owner of a bank account dies is important to be prevented from this misfortune. In order to clarify this situation, we will discuss its basic points.
What happens when a bank account holder dies
In principle, it will depend if the person who dies is the only signatory, if the account is joint, if there is a trust or if there is a will involved.
One of the biggest problems is that death can happen at any moment and, understandably, many people do not take into account the legal implications of this event.
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If the owner dies and there is no beneficiary, the account is temporarily closed. In this case, the funds are frozen until the matter is resolved in court.
Meanwhile, a judge can issue a document appointing an executor or administrator of the estate to allow the use of the money.
In the event that a will is not left for heirs, property and assets are bequeathed through intestate succession. The statutes of this legal figure depend on the state in which the deceased person resided and a judge establishes an administrator who distributes the assets.
Children may often think that they will have access to their parents’ money in this scenario, but this is not the case. Due to the structure of possession, children only have what is known as a power of attorney (power of attorney) and not a joint account. Said power ends when the account holder passes away.
What you must not do
As a warning, family members or heirs who are subjected to this situation should not fall into any criminal action. The least recommended is to try Take money out of a cashier automatic, falsify the signature of the deceased or use mobile banking to pay the bills.
This constitutes fraud and instead of solving the problem, it can only make it more complicated.
What if it’s a joint account
When it comes to a joint account and one of the signers dies, the person with whom you share the funds has rights of survivorship. This means that you will have to bring the death certificate to the bank to have the name of the deceased removed.
Once this is done, you will be in control as if you were the sole beneficiaryIt is also possible that the non-deceased person continues to issue checks, since there is legally no impediment due to the nature of this product.
The surviving account holder should be aware that the money may be subject to federal estate or state estate taxes. While the former vary, the latter are applied to amounts above $ 11 million.
Some preventive recommendations
Although we are talking about how to proceed in the event of the death of an account holder, it is ideal to take precautions to better handle this situation. Especially when you have a debilitating illness or when you are over 60, we suggest you consider these tips:
- It is a good idea to try reduce the number of accounts to reduce the complexity of the procedures. While this does not work for those who have set up a ladder scheme with CDs (certificates of deposit), it is preferable to unify savings accounts or checking accounts in the same bank.
- Always is good establish ownership of living accounts. If you have power of attorney over someone’s funds, there are several things you can do. Consider moving the account to the owner’s revocable trust, add one or more signers to the joint account, or designate one or more beneficiaries to POD (payable on death).
- Since digital account statements have become the norm for current and savings instruments, we recommend having detailed records in the event of imminent death. This is for know how many accounts there are and in which banks they are.
- If possible, have the funeral arranged in advance. The reason for this is that the heirs will need money during these difficult times. It is a way to prevent the stress of the situation and make it more bearable.
As we age or face situations that can mean death, getting everything ready is a conscious and responsible attitude in managing personal finances. As it is not possible to predict the future, we suggest you take care of your interests and those of your loved ones.