What Happens To a Bank Account When Someone Dies Without a Will?

“Where there’s a Will, there’s a way”. Your Will acts as the map for your Executors to show them how to distribute your assets after you’re gone. Without a Will, statute provides the map under the rules of Intestacy, and, to stretch the metaphor, it can often be full of confusing signs, and the path it shows can be rather more convoluted than one would wish for.

After somebody dies, the assets in their estate need to be reviewed in order that they can be closed or transferred depending upon their nature and the distribution of the estate.  Probably the most obvious assets which people think about are their bank account, whether current, savings, ISA or in a joint or sole name.

Who can access the bank account when somebody dies without a will?

One of the questions we are frequently asked is how the funds held in an account might be accessed and for what purposes they can be used prior to the closure or transfer of the accounts.

One important thing to note is that if any person held a Power of Attorney over the deceased or was appointed by the Court to manage their affairs under a Deputyship order, this power ceases on death and so the Attorney or Deputy has no further authority to deal with the deceased’s affairs.  This responsibility passes to the Personal Representatives (PR), who will either be the Executors named in their Will, or if they have none, then the Administrator whose identity will be ascertained with reference to the laws of intestacy.

How do you tell the bank that the account holder has died?

Until a bank is notified of the death, the account will continue to operate normally.  The PR will need to contact the bank to notify them of the death by producing a copy of the death certificate.  Different banks have different methods to deal with this, some have online facilities, others deal with it by post or the PR can visit the branch in person (if they can find one).

Joint accounts after one person dies

If the account is a joint account, the bank will automatically transfer the ownership of the account to the surviving joint owner or owners.  However, this does not necessarily mean that the survivor can do as they wish since the value of the joint account still needs to be recorded in the deceased’s estate for Inheritance Tax purposes.  Frustratingly, banks are increasingly refusing to divulge any details whatsoever about joint accounts notwithstanding the fact that the PR is entitled to know these details both for tax purposes and for any details they may need to deal with in the period prior to the death which assists in winding up the estate.  It is therefore prudent to get an authority from the surviving account holder for the bank to correspond with the PR so that the correct information can be. obtained.

What happens to an individual’s bank account if they die without a will?

For accounts in the deceased’s sole name, notification of death to the bank causes these to be frozen.  No further receipts or payments will occur, so it is important to note the details of any direct debits for utilities etc. which may have been paid out of the account in order that these can be transferred elsewhere.  Similarly, if there are regular payments into the account (pensions, dividends etc.) then the payee needs to be notified of the death so that they can then correspond with the PR to ensure that future payments are directed to the estate.

Generally, funds cannot be paid out of an account following death.  The main exceptions to this rule are:

• The funeral director’s invoice (although not the cost of any reception or other funeral expenses)
• Inheritance Tax: most banks offer a facility whereby they can pay Inheritance Tax directly to HMRC out of a deceased’s account, thus easing cash flow issues in the early stages of an administering the estate.

Closing the deceased bank account

In order to close a deceased’s account, it is generally necessary for a Grant of Representation (either Probate if there is a Will or Letters of Administration where the deceased died without a Will) to be presented to the bank together with the necessary closure forms and other documentation which may be required, such as PR identification.  Many banks operate a rule whereby if the combined value of all the deceased’s accounts held with them is less than a set limit (and this differs from bank to bank), then they will close the accounts with a need for Grant on the signing of an indemnity. This should not be relied upon as a means of claiming the funds.

However the accounts are dealt with post death, it is vital that the PR keeps good records, as this will be essential in accounting for the difference between an account’s date of death balance and its eventual closing balance. This can sometimes be wildly different, especially if large sums of money have been paid out for Inheritance Tax.  There are also likely to be receipts and payments during the period between the death and notification of the bank to freeze the account.

Keeping good records derived from bank statements will allow the PR to prepare accurate accounts to show to the beneficiaries, allowing all parties to have a good understanding as to how the eventual distribution of the estate has been reached.

Sadly, some estates run into disputes and so again, good record keeping is essential as the PR may need to account to claimants on the estate, the Court or similar.

Here to help

The team at Longmores can advise on all elements of dealing with a deceased’s assets including their bank accounts, property and other probate matters. Please contact Alastair Liddiard, Partner and Head of Trust and Estate Administration.

Please note, the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.