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What happens to savings accounts and the money you hold when you die? The answer depends on whose name is on the account and whether it is held in a trust.

If the account isn’t held jointly or in a trust – and Michael Halloran, a wealth management adviser, says such lack of planning is the case more often than not – the account is off limits until the estate is settled in court. In the meantime, a judge may issue a letter that grants an executor or estate administrator access.

Survivors who believe they can access an account often find they cannot do so because of its ownership structure. For instance, a son might believe he holds a joint account with his mum, when in reality he only has power of attorney. That power ends at the time of death, says Jamil G. Daoud, special counsel at Foley & Lardner.

“While the person is still alive you should confirm how the accounts are owned, because very often people are wrong in thinking they have access,” Daoud says.

Don’t forge anything

The most important thing for family members and other heirs to know is that they should never forge the signature of the deceased to pay bills or use the person’s debit or credit cards. That’s fraud. The same goes for using online banking to pay bills.

“Forging a payment, even if you are the heir, is a no-no,” Halloran says. He adds, “Don’t pull something stupid and get the family in trouble because they need cash and are trying to get the money.”

Joint account holders still have access

If the account is held by a husband and wife 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 cheques 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 inheritance tax. The Gov.UK website has more information on inheritance tax.

If the bank account is held in a lifetime 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.

Now read our joint bank account guide

Savings accounts could be a problem

Savings accounts aren’t as much affected as withdrawals. Banks typically allow others to deposit money into someone else’s bank account.

Automatic deposits and payments typically continue without interruption – but be warned: as soon as the bank is notified of the account holder’s death, all incoming deposits will be returned to sender.

This notification should be made promptly, especially if other people are authorised to use a debit or credit card, to prevent fraudulent use of the account.

Accessing funds for a funeral

If an account is solely held by the deceased, the bank will freeze the account soon after being notified. This can be a problem if family members need access to the money for funeral arrangements.

To unlock the account you will need to present the death certificate, plus evidence that you’re the authorised executor of the estate. If there’s no will, or multiple executors, then you will need to obtain letters of administration.

A few proactive steps

While much of the advice in this article is about how to manage someone’s finances once they have died, there are several small things you can do while you’re still alive or when the person you are caring for is. Daoud offers the following tips:

  • Because online statements have become the norm for current accounts and savings accounts, it’s important to obtain detailed records before the last moment so that you can understand how many accounts a person holds and where they are located.
  • Simplify accounts whenever possible by consolidating them. This might not be possible if the person has created a complicated web of savings accounts, but if there is a savings account here and a current account there, it is a good idea to merge them.
  • Determine exactly how the account is titled while the person is still alive. If you have power of attorney for someone, consider the following steps if your powers allow: Consider adding one or more joint owners to the account; designate one or more payable on death beneficiaries for the account; transfer the account to the owner’s revocable trust.
  • Pre-plan your funeral, if you can. One of the main reasons people need quick access to a person’s bank account after they have died is to cover the arrangements. Planning ahead alleviates that stress during an emotional time.

Now read our guide on how to retire a millionaire