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When you die, is your bank account in limbo?

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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