It’s a morbid thought, but the fact is that a dead person can’t use a bank account. So what happens to a bank account — and the money in it — when someone dies?

The answer depends on whose name is on the account and whether the account is held in a living trust, according to Michael Halloran, a wealth management adviser in Jacksonville, Fla.

If the account isn’t held jointly or in a trust — and Halloran says such lack of planning is the case more often than not — the account becomes off limits until the estate is settled in a court proceeding. In the meantime, a judge may issue a letter to allow an executor or administrator of the estate access to the account, but only to pay so-called “last expenses” (e.g., funeral costs).

Family members and other likely heirs should resist the temptation to forge the deceased’s name on checks to pay bills or use the deceased’s ATM or debit card to obtain cash. Forgery is fraud, as is any other unauthorized access to someone’s bank account.

“Forging a check, even if you are the heir, is a no-no,” Halloran says.

The rules may sound strict, but they exist for good reason, according to Nessa Feddis, senior counsel at the American Bankers Association in Washington, D.C.

“It’s important for the appropriate person to manage the estate and sometimes you have to move quickly, but at the same time, you want to preserve the estate so it is dealt with as the deceased person wanted,” she says.

Joint account holders can still sign checks

If the account is held by a husband and wife as tenancy by the entirety or any two people as jointly with rights of survivorship, the surviving account holder would need only to present a death certificate to have the deceased’s name removed from the account.

“Even if they didn’t run into the bank, legally, they could still write checks because the account is held in a way that either party can sign,” Halloran says.

The surviving account holder should keep in mind that the money in the account could be subject to federal estate or state inheritance tax. Federal tax is due on very large estates. State tax laws vary.

If the bank account is held in a living trust, the successor trustee named in the trust document can present the death certificate and a copy of the trust to the bank to take over the account.

Deposits are no problem

Deposits aren’t as much affected as withdrawals. That’s because anyone can write a check to be deposited into someone else’s bank account if the check is for deposit only.

“Any bank will take money if it’s for deposit only because you can’t get it out unless you are on the signature card,” Halloran says.

Automatic deposits and payments typically continue without interruption until the bank is notified of the account holder’s death.

This notification should be made promptly, especially if other people are authorized to use an ATM or debit card. A professional caregiver who has been authorized to use the account generally retains that authorization until the bank is notified otherwise, according to Feddis.

“That is something to be careful about,” she says.

Funeral director may notify Social Security

Sometimes an account is frozen after someone’s death even if no one — apparently — has notified the bank. That can happen because the funeral home may notify the Social Security Administration on behalf of the family and that notification can terminate Social Security payments, which typically are direct-deposited.

Social Security is payable monthly and isn’t prorated for the month in which a recipient dies. Consequently, checks that turn up in the mail after that date must be returned to the U.S. government. Payments that have been direct-deposited can be reversed by the U.S. Treasury.

“Social Security can come back to the bank sometime later and say, ‘That person is dead,’ so they have to give it back,” Feddis says. “You aren’t supposed to take that money.”

Family members who need ready cash to pay a deceased person’s last expenses might want to look to brokerage accounts rather than bank accounts, Halloran says. That’s because brokerage accounts typically are subject to a transfer on death election, or TOD, which allows the account to be retitled after death. All that’s needed is a copy of the death certificate.

One last word of advice, also from Halloran: “Don’t pull something stupid and get the family in trouble because they need cash and are trying to get the money.” It’s just not worth the risk.

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