As probate attorneys, we often receive questions about how to claim a deceased person’s bank accounts. While the process for claiming a bank account after death does not have to be complicated, it often is for a variety of reasons, and especially if disputes arise surrounding the rightful beneficiary of the account.
What happens when there is no beneficiary on a bank account? Do bank account with beneficiaries have to go through probate? Does a trust override a beneficiary on a bank account? Does a will override a beneficiary on a bank account? Can you contest a beneficiary on a bank account?
Learn the answers to these questions and more from Keystone’s article on bank account beneficiary rules.
When a person dies, there are a lot of loose ends that will need to be tied up. One of those loose ends is closing the deceased person’s bank accounts (e.g., checking accounts, savings accounts, retirement accounts). The complexity of this process will depend on a range of factors, including the nature of the account (e.g., Is it a pay-on-death bank account? Is it a joint account?) and whether or not you’ve been granted the legal authority to manage the account, among other things. While getting access to a deceased person’s bank account can be straightforward (especially if there is a joint account owner or if the deceased account owner had designated a pay-upon-death beneficiary ), we recommend working closely with a probate attorney following a loved one’s death as a precaution to ensure your beneficiary rights are upheld during the administration process and to promptly resolve any probate disputes that may arise. In the next section, we review the basics of what happens to a person’s bank account when they die . If you are interested in learning about how non-cash assets are transferred after death, read our article: What Happens to Property When Someone Dies?
TELL US WHAT HAPPENED. WE’LL BE IN TOUCH SOON. What Happens to a Bank Account When Someone Dies? How to Claim Money From a Bank After Death Can You Contest a Beneficiary on a Bank Account? FAQs: Bank Account Beneficiary RulesSome bank accounts will have beneficiaries, while others won’t. It’s important to remember that while most checking and savings accounts can be transfer-on-death or pay-on-death bank accounts (which make withdrawing money from the bank account after death immediately possible for the beneficiary designated on the account), it is generally not required for account owners to name a beneficiary, nor are account holders necessarily aware of their right to do so.
For a standard checking or savings account to have been successfully converted to a transfer-on-death or payable-on-death bank account in California, the account holder should have filled out and signed a type of document known as a “ Totten trust ” with their bank. If they did not take this step, getting access to the deceased person’s bank account could be more complicated.
Bank accounts don’t necessarily have to pass through probate; whether they do depends on the answers to the questions mentioned in a previous section. First, let’s touch on what probate is.
Probate is a court-supervised process used to authenticate a decedent’s will, appoint an executor or administrator of the estate , locate and value estate assets, pay the decedent’s creditors and distribute their assets to beneficiaries , among other things. While probate does have its benefits, it can be challenging to navigate, expensive, time-consuming and difficult for the decedent’s loved ones, who often are still grieving their loss when the probate process begins. Another downside to probate is that it can delay when beneficiaries and/or heirs receive their inheritances.
As a result of these pitfalls, many people attempt to avoid probate through various means, including by executing trusts, utilizing expedited probate proceedings (e.g., small estate affidavits , Spousal Property Petitions ), and designating beneficiaries on transfer-on-death and payable-on-death assets, such as bank accounts, life insurance policies, retirement accounts, and annuities.
When it comes to bank accounts, it is an unfortunate reality that banks often fail to inform account holders of their right to designate a beneficiary on the account. If this is the case and the account wasn’t owned jointly with someone else, it’s highly likely that the account will become a part of the decedent’s estate, resulting in it having to pass through probate. The account will also fall under the authority of the executor or administrator, who can use its funds to pay valid creditor claims before distributing the remaining assets to the beneficiaries and/or heirs who are supposed to inherit them.
If you’re unsure whether a deceased person’s bank account will need to pass through probate, the best way to find out is to consult with a probate attorney .
It’s relatively easy to claim assets as a designated beneficiary, but what happens to bank accounts with no beneficiary?
When there is no beneficiary on a bank account , it’s important to find out whether the decedent shared ownership of the account with someone else, because if they did, that person will be presumed to gain full ownership of the account. If there was no joint owner and the decedent did not have a trust, then the account may be subject to probate.
For certain estates, there may be ways to bypass the formal probate process and settle the estate, as discussed earlier; however, not all estates will be eligible to utilize these procedures, as they are generally intended for small, simple estates or to complete transfers of property from the deceased spouse to the surviving spouse . A probate attorney can help you determine whether the estate you’re involved with is eligible for these expedited procedures.
A question we’re often asked as probate attorneys is: Do bank accounts with beneficiaries have to go through probate? If there is a payable-on-death beneficiary for a bank account, it generally means that the account won’t have to go through probate.
Bank account beneficiary rules usually allow payable-on-death beneficiaries to withdraw the entirety of a decedent’s bank account immediately following their death, so long as they present the bank with the proper documentation to prove that the account holder has died and to confirm their own identity. We’ll discuss the documents required for designated beneficiaries to access a decedent’s bank account in a later section.
Of course, there are specific instances where a designated beneficiary may not work out, resulting in the bank account having to pass through probate. For instance, it’s possible the designated beneficiary on an account could not be located or died before the account holder.
Similarly, there could be a dispute relating to the designated beneficiary’s right to the account. As an example, there may be evidence to suggest that the decedent was unduly influenced into adding the beneficiary to the account, which, if successfully proven, could disqualify the beneficiary from receiving any of its funds.
When a bank account has a pay-upon-death beneficiary , the executor and administrator cannot access its funds to pay the decedent’s debts and/or estate administration expenses; however, if you are a debtor-beneficiary , you should keep in mind that once you claim the deceased person’s bank account, your own creditors can access your newly acquired funds to satisfy your debts. Likewise, you could be responsible for paying taxes on the money you received.
While inheritances are generally income tax-exempt, it is a good idea to consult with a probate lawyer or accountant following an account holder’s death to learn about your tax liabilities.
Joint bank account rules on death are not complicated. They typically allow joint account owner(s) to assume ownership of the deceased account owner’s share of the account once they die, so long as the account carries the right of survivorship (which generally is automatic with joint accounts).
This means that while the joint account holders are alive, they share ownership of the account, but once an account holder dies, the surviving account holder(s) assume full ownership of the account and can continue accessing its funds as they used to.
Similar to payable-on-death beneficiary rules, joint bank account rules on death do not permit executors and administrators to access a decedent’s joint accounts to pay the decedent’s debts and/or administration expenses. Joint account holders, however, could be liable for paying taxes on any income earned by the account.
People create wills to provide instructions for how their assets should be distributed after they die. As a result, the creator of a will (called a testator) may include a provision in the document relating to their bank accounts to ensure there is no confusion about who is to inherit the accounts.
If a decedent dies with a will and their bank accounts do not have beneficiary designations, then the bank accounts will become a part of the decedent’s probate estate.
This means that the funds contained in the accounts will be transferred to the court-appointed executor or administrator for deposit into an account in the name of the decedent’s estate, and they may be able to be used by the executor or administrator to satisfy the decedent’s debts and pay probate costs . Any remaining funds will be distributed to the decedent’s estate beneficiaries and/or heirs in accordance with the provisions of their will once the probate process completes.
If a decedent dies with a trust as their primary estate planning document, and they have bank accounts in their name that do not have beneficiary designations, probate potentially could be avoided by filing a Heggstad Petition , which is a type of 850 Petition, to have the bank accounts transferred into the decedent’s trust .
While Heggstad Petitions can greatly expedite the process of transferring assets into and out of a trust, whether the court grants the petition will depend on whether there is sufficient written evidence that the settlor intended to hold the asset as an asset of their trust. Until the court grants the petition, the decedent’s bank accounts would be subject to probate.
Closing a bank account after death with no will is not that different from closing a bank account after death when there is a will. In other words, if a bank account is jointly owned or has a beneficiary designation, its contents can be transferred directly to the joint account holder(s) or designated beneficiary, respectively, following the account holder’s death without the will playing a role in this process.
On the other hand, if the decedent died without a will, but their bank account was not jointly owned and did not have a beneficiary designation, it will become a part of their probate estate. The administrator of their estate ultimately will distribute the funds in accordance with the state’s intestate succession laws (which dictate what happens to property when someone dies without a will ). With intestate succession, a decedent’s assets pass to their closest heirs (e.g., their spouse, children, grandchildren, parents, siblings, etc.).
Naming a trust as the beneficiary of a bank account is something trust creators (called settlors, grantors or trustors) commonly do so that the asset can bypass probate and be distributed in accordance with the terms of their trust.
The primary advantage of naming a trust as beneficiary of a bank account is that it help keeps assets consolidated so the decedent’s survivors don’t have to track them down.
Plus, since a trust bypasses probate, designating it as a beneficiary can help the decedent’s loved ones save significant time and money.
If a decedent designated their trust as the beneficiary on their bank account, it will have to be the trustee who goes to claim the contents of the account.
They generally will have to present to the bank with a certified copy of the decedent’s death certificate, their own government-issued ID, and the trust instrument in order for the asset to be released to them, though the documentation needed may vary from bank to bank, so it is best to call in advance to find out what you need to bring.
Once you understand the circumstances surrounding a deceased person’s bank account (e.g., whether the account is jointly owned or has a beneficiary designation), you will need to figure out how to find the bank accounts of the deceased person and how to get money from the deceased person’s bank accounts.
Keep in mind that decedent’s bank accounts will be inaccessible to most people, even their own family members. For example, our probate attorneys frequently receive inquiries from adult children about how to access the bank account of a deceased parent , and we often have to inform them that they do not have a right to access it at all, since they were not joint owners of the account or designated as beneficiaries on the account.
Conversely, if the bank account is a part of the probate estate (on account of its lack of a beneficiary designation or joint owner(s)), only the executor or administrator will be able to access it.
Whether you are a designated beneficiary or an executor/administrator, it is crucial to act quickly to locate a deceased person’s bank accounts, because assets that are unclaimed for a prolonged period of time could be sent to your state’s unclaimed property division. While it is possible to reclaim assets the unclaimed property division appropriated, it is best to locate them before it gets to this point.
In the following subsections, we go over the different ways you can obtain a decedent’s banking information.
Ideally, the decedent will have included information about their bank accounts in their will, but this is not always the case, nor do all decedents die with a will.
However, chances are that if a decedent died with a will and the will was prepared by an experienced estate planner, it will contain information about their bank accounts. If the decedent died without a will, it may be necessary for you to do some detective work to track their bank accounts down.
Considering that banks frequently send communication and billing statements via the postal service, you may be able to locate their bank accounts by simply perusing their mail. Likewise, you can search their home for other documents, such as tax returns, ATM receipts and checkbooks, or try logging onto their computer to see if you can find any information there.
While physically stopping by banks close to the decedent’s home or place of work is generally a great way to find out where they kept their money, banks, for obvious reasons, will not release an account holder’s information and funds to just anyone. You will need to provide documentation to prove both that the account holder died and you have the legal authority (as a designated beneficiary, joint account holder or executor/administrator) to access the account.
If the decedent had been working for an employer, chances are that the employer has their bank account information from making direct deposits to their account. Similar to banks, the human resources department is unlikely to provide you with the information you are seeking unless you can provide proof that their employee has died and that you have the authority to manage their bank accounts.
As previously mentioned, there is a risk of assets that remain unclaimed for a prolonged period of time being sent to the state; however, it is rare for this to happen. Still, if you are not having any luck locating a decedent’s bank accounts and have tried all the options mentioned above, then it may be worth searching online databases that were created specifically for the purpose of tracking down missing money and/or property.
A few online databases to search include:
Figuring out the probate process and how to deal with bank accounts after death can be a lot to handle when you are grieving the loss of a loved one. Luckily, you can pawn off most of these cumbersome tasks on your probate attorney.
While an attorney can certainly help with locating a decedent’s bank accounts, they are an excellent resource to have by your side for the entirety of administration, regardless of your legal needs and whether you are a beneficiary, heir, executor/administrator or trustee .
To ensure that the money in a decedent’s bank accounts passes to the beneficiaries they intended or to their estate, banks will require you to present certain documents before they release the funds to you.
The documents you will need to provide depend on whether you are the executor/administrator of the decedent’s estate or a designated beneficiary on the bank account. Keep in mind that joint account holders will not need to provide any documentation to access the account they had been sharing with the decedent and can persist using the account in whatever way they wish.
Executors and administrators of a decedent’s estate can only access their bank accounts if the decedent had not designated a beneficiary for the account.
The documents an executor/administrator generally will be required to present to the bank include:
Executors and administrators should obtain multiple copies of the decedent’s death certificate and the Letters of Administration or Letters Testamentary, as these documents will be required for many of the tasks they’ll need to complete over the course of estate administration.
If you’ve discovered that you are the designated beneficiary on a loved one’s bank account, you can go to the bank immediately following their death to claim the asset. There typically is not a waiting period for beneficiaries to access these funds; however, laws can vary by state, so it is best to consult with a probate attorney if you have questions about your rights.
The documents a designated beneficiary generally will be required to present to the bank include:
Once the funds in a decedent’s bank account are released to you, it’s unlikely your entitlement to the funds can be successfully disputed by another party, as recovering money or property that has already been distributed is an uphill battle that is seldom won.
There are many reasons why you might contest a bank account beneficiary. For example, if you believe that the beneficiary on the account is someone other than whom the decedent had intended to name as a beneficiary, you may want to consider pursuing legal action.
Before moving forward with contesting the designated beneficiary on a bank account, it’s important to ensure that you have standing (which we go over in a later section) and a valid reason for disputing the beneficiary designation. Whether the decedent was unduly influenced or there were mistakes within the beneficiary designation form, it’s generally the contesting party’s responsibility to provide proof.
Learn more about valid reasons for contesting a bank account beneficiary from the following sections.
Perhaps you, your father, and your sister had always been close. Your father had made it clear that he intended to pass all of his assets to you and your sibling. However, years later, after he passed away, you and your sibling discover that he designated a girlfriend who entered his life mere months before he died as the beneficiary on his bank account. You suspect this girlfriend unduly influenced your father to change his original beneficiary designation.
The scenario above is fairly common and is one of the key reasons why you may want to contest a designated beneficiary. If a scenario such as this applies to you, and you choose to contest the beneficiary designation in court, you’d be faced with the challenge of proving that a bad actor interfered with your father’s initial plans.
In many cases, there’s no wrongdoing at all. Something as simple as the phrasing of a document or a typo can cause enough confusion to bring about a dispute.
By understanding the grounds for contesting a designated beneficiary, you’ll be prepared to take legal action in a timely manner.
The grounds for contesting a designated beneficiary don’t always involve wrongdoing. In some cases, the decedent may have simply lacked the capacity to make sound decisions about bank account beneficiaries.
Common reasons why a person may lack capacity include:
If you suspect that your deceased loved one had made changes to their bank account beneficiaries while lacking capacity, it generally will be your responsibility to prove it with evidence. Perhaps there’s a doctor who can attest to the decedent’s lack of capacity or provide documentation to confirm it.
Undue influence entails someone exerting excessive pressure on a vulnerable person to obtain a particular result. Typically, the end goal of undue influence is to gain the victim’s trust so they will act according to the influencer’s best interests, as opposed to their own. Caregivers, fiduciaries and family members are the most common perpetrators of undue influence.
If you suspect undue influence because the beneficiary on a decedent’s bank account isn’t someone they would have named under normal circumstances, then you will need to prove your suspicions with evidence in order for the beneficiary designation to be overturned. Proving undue influence can be challenging, so it is recommended that you seek the assistance of a probate attorney.
Sometimes, if the required steps were not taken by an account holder to designate a beneficiary or they made a mistake on the beneficiary designation form, it’s possible the beneficiary designation can be contested.
Some of the ways mistakes can be or documents can be executed improperly include:
Suppose that a decedent’s adult child intentionally lied to the decedent about how dire their financial situation was in order to be designated as the beneficiary on their bank account. When someone intentionally deceives a person for personal or financial gain, it is considered fraud, and it is a valid reason for contesting a beneficiary designation.
If you have evidence that someone perpetrated fraud in order to be designated as a beneficiary on a decedent’s bank account, then speak with a lawyer as soon as possible to learn how to effectively prove your claim.
While forgeries are not common in the context of bank account beneficiary designations, it’s not unheard of for them to occur. For example, an adult child could forge their parent’s signature on a change of beneficiary designation form and mail the documents to the bank, or upload them online, to effectuate a change without their parents’ knowledge or consent.
That said, forgeries can be exceedingly difficult to prove. If you suspect forgery, an experienced attorney can help you gather the evidence you need and litigate your case in court.
To contest a bank account beneficiary, it’s necessary to have standing. Standing means that you have a financial interest in the account. In other words, if you were to successfully contest the beneficiary designation, you should stand to receive some or all of the account. Learn more about the parties who generally have standing to contest a bank account beneficiary from the sections below.
