What Happens to a Bank Account When Someone Dies?

The Short Answer

A bank account is either a non-probate asset that skips court (a POD or joint account) or a probate asset that the executor collects. The single fact that decides which one you are dealing with is the titling on the account, not the will. Below is what happens in each case, and what to do if there is no beneficiary and no will.

The Bank Freezes a Sole Account

Once a bank is notified of a death, it freezes any account held in the deceased’s name alone. Direct deposits and automatic payments stop, and no one can withdraw until the bank sees proof of legal authority. This protects the money, but it can catch families off guard when bills are due. Notify the bank promptly with a death certificate, and be ready to show letters testamentary or letters of administration once the court issues them.

POD or Joint Accounts

• Payable-on-death (POD) account. The owner named a beneficiary to receive the balance at death. The beneficiary claims it directly from the bank with a death certificate and ID. It never enters probate.
• Joint account with right of survivorship. The surviving co-owner already owns the account and simply keeps it, usually by giving the bank a death certificate to remove the deceased owner.

In both cases the money passes outside the estate, so it is not used to pay the estate’s debts unless nothing else is available.

An Account in One Name

An account in the deceased’s name alone, with no POD beneficiary and no joint owner, is a probate asset. For a larger balance, the executor collects it with court authority and runs it through the estate. For a smaller balance, many states let the heir skip full probate and collect the account with a small estate affidavit, a sworn form given to the bank once a short waiting period passes. The executor often moves the funds into an estate bank account to pay debts and expenses before distributing what is left.

No Beneficiary and No Will

If the account has no POD beneficiary, no joint owner, and the person left no will, the balance still passes through the estate, but the state’s intestate succession law decides who inherits, usually the surviving spouse and children first. A POD or joint designation, by contrast, controls whether or not there is a will, which is why those designations are such a simple way to keep an account out of court.

Unclaimed Accounts

An account no one claims does not stay at the bank forever. After a dormancy period set by state law, the bank turns the balance over to the state as unclaimed property, a process called escheat. The money is not lost: an heir can still claim it later through the state’s unclaimed-property office by proving their right to it. Searching your state’s unclaimed-property database is a good step when settling an estate, in case the person had a forgotten account.