What happens to bank accounts when someone dies in Australia?

Bank account protocol when you die

When a bank is notified of a customer's death, they will usually freeze the account's funds until they receive a grant of probate or letters of administration which has been validated by the supreme court. This legal document confirms the appointment of an executor or administrator, who will manage the deceased person's assets, including their bank accounts.

Until this point, an account freeze will prevent any accessing or releasing of the deceased's funds- cancelling further transactions or recurring payments from this account.

Who can access your bank account after you die?

Access to the deceased's accounts will be determined by the executor or administrator of their estate. If there is no Will, the next of kin or a family member may apply for letters of administration.

In contrast, if there is a valid Will which appoints an executor or administrator, they can access funds in the bank account to pay for funeral expenses or manage the deceased's financial affairs. Once any outstanding debts or personal loans are accounted for, any remaining funds can then be distributed to the beneficiaries.

What happens to joint bank accounts?

In Australia, jointly held bank accounts will allow access to the surviving joint account holder, allowing them to release funds when the co-owner person dies. Whilst they have the right to this access, the deceased person's share of the funds still forms part of their estate. Meaning the deceased’s share will be distributed according to their Will or the laws of intestacy.

Joint accounts can have different rules and restrictions in different places. So as the surviving holder, it's best to speak with your bank to arrange assistance and seek specific information about your joint account.

What happens to unclaimed funds?

If the deceased person's estate does not have a valid Will, or if the Will does not specify who should receive any unclaimed funds, then any remaining money will be distributed according to the laws of intestacy.

This means that if there remains unclaimed funds- even after the deceased's estate has been distributed, funeral costs paid for and debts balanced- then the bank may transfer the funds to the state government. These will then be held until they receive further information, or they are claimed by a rightful owner, whether that's a surviving spouse, next of kin, or beneficiary.

It's important to note that the specific process and time frame for unclaimed money will vary depending on the bank and the state in which the deceased person lived. If you have any questions about unclaimed money in a bank account, it's best to speak with the bank or a financial advisor for specific information and guidance.

Debt held in a deceased person's name

When someone dies, their financial situation and the debt they owe does not simply disappear. The deceased person's estate, or the assets they leave behind, may be used to pay off any outstanding debts, including any debts owed to a bank or financial institution.

As a sole account holder, if there are inadequate estate funds or assets to cover the debts can result in the debts being discharged, meaning it is forgiven and the creditor will not receive any payment. However, this depends on the laws of the jurisdiction in which the deceased person lived, as well as the type of debt and the circumstances surrounding it.

Debt with a joint account

If the deceased's account has a joint holder, the surviving account holder may be responsible for paying off any remaining debt in the account. If the deceased had a co-signed loan, the co-signer may also be responsible for paying off the debt. Meaning specific existing payments continue to pay the deceased's debt after their death.

The process and outcome of handling a deceased person's debt can vary greatly depending on the laws and regulations in the jurisdiction where the person lived, as well as the specific circumstances of the case. It is advisable to seek the advice of a qualified attorney for more information in these situations.

Planning ahead to protect your bank accounts in death

Writing a Will and planning your estate can help protect your money after you die by clearly stating your wishes and outlining the distribution of your assets. This can help prevent confusion, disputes and a costly legal battles among your heirs. Similarly, it can prevent delayed grant of probate, which leaves your assets unmanaged and your beneficiaries without support in this time.

With a Will, remaining funds in your bank account are distributed according to your wishes, rather than being subject to the laws of intestacy- which determine how a person's assets are distributed if they die without a Will. This can also help to minimise the amount of taxes and other fees that your deceased estate may owe to a financial institution, as well as ensuring that your assets are distributed in a timely and efficient manner.

Creating a comprehensive estate plan can also help you plan for unexpected events, such as disability or incapacity, by specifying who should make decisions on your behalf and outlining how your assets should be managed. This can help ensure that your wishes are honoured and your assets are protected even if you are unable to manage them yourself.

It is important to note that estate planning laws and regulations can vary greatly depending on the jurisdiction in which you live, so it is advisable to seek the advice of a qualified attorney when creating a will and planning your estate.

Dealing with a loved one's death is never easy, but understanding the process of releasing funds can help minimise the financial stress aspect of this time.

By understanding the bank account protocol for your loved one's accounts- including who can access their funds, what happens to joint accounts, and whether an executor can use a deceased bank account- you can find peace of mind when someone dies, with the knowledge that their assets will be distributed according to their wishes.

How Safewill can help with a deceased estate

To protect your joint account holder, bank accounts and final wishes, get started on writing your Will today. It's easy, affordable and flexible- so you've really no excuse not to.

Start by giving us a call on 1800 103 310 , or via live chat now.