What happens to a bank account if someone dies?
Losing a loved one brings grief and challenges. One of these challenges is likely to involve finances, especially if you hold any joint accounts. We take a look at what to do if the unthinkable were to happen.
Key points:
- When a person dies, all banking fees should be stopped and any charged after their death should be refunded.
- All debts will need to be settled before a bank can release any remaining money to a legal representative.
- If you’re a joint account holder with the person who died you may continue to operate the account subject to the terms and conditions.
It can be heartbreaking when a loved one dies, and the added burden of arranging their affairs can add considerable weight to the emotional load. When it comes to the financial aspect of this, there are certain steps that need to be taken, such as notifying financial institutions of the news. If you have joint banking accounts with the person who has passed away, this can complicate matters, especially if you are not the primary account holder.
So let’s take a close look at what happens next.
When someone dies, what happens to their finances?
When someone dies, their affairs are usually dealt with by those appointed as an executor of their will – assuming they had left a legally valid will. The executor will then be able to contact any relevant bodies to go about winding up a person’s estate, which includes dealing with any banks where the person had accounts. This could be their everyday transaction account, any savings, term deposits, credit card, personal loans or mortgage.
If there’s no will in place then the person is said to have died ‘intestate’. If you’re dealing with the person’s affairs, you need to check to see what rules apply in your state or territory. If you were married to the person or in a de facto relationship, the process could be fairly straight forward, but if things are a little more complicated then you might need some help. You might want to check with your local public trustee office or seek some help from a solicitor.
You’ll have to take steps to show any bank that you’re entitled to deal with the dead person’s affairs. In the absence of a will, that means you will usually have to obtain letters of administration.
When do you need to notify a bank when someone dies?
The advice from a number of banks, such as the Commonwealth Bank, is that it’s a good idea to call the deceased person’s financial institution “as soon as you can”. Many financial institutions have specialist departments that help people through this period. This could be you notifying the bank, or the person handling the deceased estate.
If you are notifying the bank, you may need the deceased person’s death certificate, and other identity documents to show your relationship with that person. You will also likely need to have on hand the details of who is managing the estate, whether that be the executor of their will, a legal representative who is managing the estate or details of the public trustee.
However, keep in mind that notifying the bank will likely change the way some banking accounts can be accessed and operated. If you have joint bank accounts or credit cards, make sure you understand what happens and if you will be able to access the funds that you need.
How do banks handle a deceased estate?
The Australian Banking Association’s code of conduct lays down the process member banks should go through when dealing with the representatives of a dead person’s estate.
The code says banks must “provide clear and accessible information” to anyone dealing with the dead person’s banking affairs, including information about any direct debits or recurring payments on the account. It also states:
- All banking fees should be stopped, and any charged after the person’s death should be refunded.
- Banks should aim to act on any instructions from the representative of the dead person’s estate within 14 days.
Check with each bank where a person had accounts to see what information they require, such as certified copies of the death certificate. If the information isn’t readily available on a bank’s website you can call and ask for help, or drop into a local branch if the bank has one.
All debts will need to be settled before a bank can release any remaining money to a legal representative, though they may be able to release some money early to help cover any funeral costs.
While any debits from an account will be stopped, it should still be able to accept any credit payments, so it’s a good idea to keep the account open while their financial affairs are being finalised.
“It is highly possible that payments will need to be made to the deceased’s accounts in the months following their passing,” says Westpac on its website.
“Examples of these payments are superannuation benefits, shares, tax refunds, lost super cheques in the estate of deceased person’s name, and so on.”
What if I had joint bank accounts with the person who died?
If you’re a joint account holder with the person who died, the banking code says you may continue to operate the account subject to the terms and conditions of the account. That’s usually pretty straight forward for most banking accounts, apart from credit cards.
Credit cards are usually held by only one person who then has the option to have additional cards issued to other people. That’s where things may become more complicated.
For example, upon notification of the death of a person, NAB says any credit cards the person had will be immediately cancelled along with any additional cards that were issued and any recurring debit payments set up on the card.
“If you’re an additional cardholder on the account, your card will no longer work,” says the bank’s website. “You may wish to apply for a credit card in your own name.”
That could cause issues if you had any regular payments from the credit card, such as for bills, insurance payments or other essentials. You’ll need to talk to the bank to see what options are available to you to maintain any payments.
If there was a joint home loan then you will likely need to renegotiate with the bank to see what repayment options meet your needs.
Make things easier: why it’s important to plan ahead
While banks and other financial institutions aim to do all they can to help you deal with the financial affairs of a person who’s died, there are things that can be done beforehand that can make the whole process much easier.
“The process is usually much more straightforward if the person puts clear instructions in place in advance, before they pass,” said Timothy King, Head of Banking Operations, Payments, and Business Services at Great Southern Bank.
“It’s about being prepared and having open conversations with your partner, children or other loved ones now, so that when it comes time to finalising your estate, it’s a seamless process for them.”
That’s why it’s important to have an up-to-date will that details what you want to happen after you die. It’s a good idea to also include a list of all your financial affairs, bank accounts, savings and any other investments, and any relevant contacts.
You can use these checklists to know who to contact when someone has died.
- Banks or credit unions
- Financial advisor (if they used one)
- Insurance companies (including life insurance)
- Solicitor
- Superannuation fund
Documents you might need:
- Certified copies of the death certificate
- Certified copies of the person’s will
- Certified copies of the Grant of Probate (if there is a will) or the Letters of Administration (if there is no will)
- Insurance policy documents
- Proof of your identity and your relationship to the dead person.
What is the Australian Death Notification Service and how can it help?
The Australian Death Notification Service is a free service that can help you notify multiple organisations about the death of someone using a single online process. It’s intended to reduce the number of interactions and conversations you need to have with any relevant organisations.
It’s a service that’s supported by all Australian states and territories.
You will need some details and documentation about the person who died before you can use the services, such as:
- A death certificate
- Which organisations you want to tell (view the list)
- Full name of the person who died
- Their date of death
- Their date of birth
- Address information
- Any business information
- Where the person died.
Cover image source: Andrii Zastrozhnov/Shutterstock.com
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This article was reviewed by our Deputy Editor, Canstar Amanda Horswill before it was updated, as part of our fact-checking process.
Michael is an award-winning journalist with more than three decades of experience. As a senior finance journalist at Canstar, Michael's written more than 100 articles covering superannuation, savings, wealth, life insurance and home loans. His work's been referenced by a number of other finance publications, including Yahoo Finance and The Motley Fool.
Michael's worked as a reporter and producer for the BBC and ABC, including for Australian Story. He's also worked as a feature writer for The Courier-Mail and as a science and technology editor and commissioning editor at The Conversation.
Michael's professional awards include a Queensland Media Award and a highly commended in the Walkleys. In 2021 he was part of a team that was a finalist in the Australian Museum Eureka Prize for Science Journalism. He holds a Bachelor of Science in mathematics and applied physics (Manchester Metropolitan University) and a Masters of Science in pure mathematics (Liverpool University).
You can connect with Michael on LinkedIn.
- When someone dies, what happens to their finances?
- When do you need to notify a bank when someone dies?
- How do banks handle a deceased estate?
- What if I had joint bank accounts with the person who died?
- Make things easier: why it’s important to plan ahead
- What is the Australian Death Notification Service and how can it help?
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