Learn more about how different kinds of deceased accounts work and how you close one.
Definition and Examples of a Deceased Account
A deceased account is a financial account (usually a checking or savings account) owned by someone who’s no longer alive. When a bank finds out that a customer has died, it will typically freeze that person’s account (turning it into a “deceased” account) until it receives further instructions from the court or until a beneficiary comes forward. For example, if your grandmother dies and has no named beneficiaries on her bank account, the bank would label it as a deceased account and prevent anyone from accessing the funds until it was sorted out in court.
How a Deceased Account Works
When someone dies, a person close to them—either a spouse, immediate relative, estate executor—or a court-appointed administrator should notify the bank as soon as possible. They will be asked to give the bank:
The deceased’s full legal nameAn official copy of their death certificateTheir Social Security numberAny other legal documents required by state law
The bank will begin the transfer process by looking at the type of account the person had and how it was set up. Depending on what it finds, one of three things could happen:
Joint Accounts
Most joint bank accounts are set up with a right of survivorship in place. What this means is that if one owner passes away, the other owner takes full possession of the account and continues accessing it as normal. In this case, the bank does not turn the joint account into a deceased account and it is not frozen. The surviving owner can continue keeping the account as is or can close it and transfer the funds somewhere else.
Payable-on-Death Accounts
If the deceased’s account is “payable on death” (POD) or “in trust for” (ITF), this means it has named beneficiaries. In this case, the funds in the account immediately go to the named beneficiaries as soon as a death certificate is presented to the bank. The account does not become deceased and it does not have to pass through probate.
Accounts With No Beneficiary
Single-owner bank accounts with no named beneficiary become the property of the deceased’s estate. The probate court will appoint an executor who will settle the deceased’s debts and divide up the remaining funds according to the state’s intestate succession laws. If no heirs are appointed, the bank will close the account once probate ends, and send the remaining funds to the state.
Accounts With a Listed Power of Attorney
If the deceased had someone with power of attorney who made financial decisions for them while they were alive, that person may no longer have access to their bank account after the death.
Accounts Held in Trust
If the deceased’s bank account was set up as part of a living trust to avoid probate, the named successor trustee or personal representative will take over the bank account upon the death. This person will be in charge of distributing the funds to beneficiaries in accordance with the deceased’s trust documents.
How Do You Close a Deceased Account?
The estate administrator or executor is responsible for closing the deceased account once the probate process ends. That person then can pay off the deceased’s creditors and divide up the remaining funds among heirs.
Special Considerations
Proper estate planning is key to ensuring your bank accounts go directly to your intended loved ones without having to pass through probate or be frozen first. Some banks have dedicated estate planning departments. You can also meet with an attorney or estate planning specialist in your area to make sure your will and estate are in proper order when it comes to accounts that might be in danger of being frozen after your passing.
