Blog: What Happens to Your Bank Account When You Die?

By: Alex R. Flaten

INTRODUCTION

Many people assume that when they pass away, their loved ones will automatically have access to their bank accounts. Unfortunately, that isn't always the case. What happens to your bank account after death depends on how the account is titled, whether you have designated beneficiaries, and whether you have an estate plan in place.

Understanding what happens can help you avoid unnecessary delays, legal complications, and financial stress for your family.

SOLELY OWNED BANK ACCOUNTS

If a bank account is owned solely by the deceased and there is no payable-on-death (POD) beneficiary designated, the account generally becomes part of the person's estate.

Once the bank is notified of the account holder's death, it will typically freeze the account until someone is legally authorized to manage the estate. This usually means a personal representative (also known as an executor) must be appointed through the probate process.

The funds in the account may then be used to:

• Pay outstanding debts and taxes.

• Cover certain estate administration expenses.

• Be distributed to heirs or beneficiaries according to the will or, if there is no will, Minnesota's intestacy laws.

JOINT BANK ACCOUNTS

Many married couples and family members own bank accounts jointly with rights of survivorship. In most cases, when one owner dies, the surviving account holder automatically becomes the sole owner of the account.

The surviving owner generally does not have to wait for probate to access the funds. However, it is still important to notify the bank and provide a certified copy of the death certificate so the bank can update its records.

PAYABLE-ON-DEATH (POD) ACCOUNTS

A payable-on-death designation allows you to name one or more beneficiaries who will receive the money in the account upon your death.

When the account owner dies, the beneficiary can typically claim the funds directly from the bank by providing:

• A certified death certificate.

• Valid identification.

• Any additional documentation required by the financial institution.

Because the funds transfer directly to the named beneficiary, they usually avoid probate.

What If There Is No Will?

If you die without a valid will, your bank accounts that are part of your probate estate will be distributed according to Minnesota's intestacy laws. This means state law determines who inherits your assets, which may not reflect your personal wishes.

Without proper planning, your loved ones may face additional court proceedings, delays, and expenses before they can access your assets.

CAN FAMILY MEMBERS WITHDRAW MONEY AFTER DEATH?

Many people believe that a spouse, child, or other family member can simply withdraw money from a deceased person's account. In reality, this is often not permitted.

Unless someone is:

• A joint owner of the account,

• A named POD beneficiary, or

• A court-appointed personal representative,

They generally do not have legal authority to access the account after the owner's death.

Attempting to withdraw funds without proper authorization can create legal issues and may expose the individual to liability.

WHY ESTATE PLANNING MATTERS

Proper estate planning can make the transfer of your assets much smoother. Depending on your circumstances, you may benefit from:

• Naming payable-on-death beneficiaries on your accounts.

• Creating a revocable living trust.

• Preparing a valid will.

• Executing financial and healthcare powers of attorney for incapacity planning.

• Reviewing your beneficiary designations regularly.

These simple steps can help your family avoid unnecessary probate, reduce delays, and ensure your wishes are carried out.

HOW JENNRICH LAW CAN HELP

At Jennrich Law, we help individuals and families throughout Minnesota create comprehensive estate plans that protect their assets and provide peace of mind. Whether you need a will, trust, powers of attorney, or guidance through the probate process after the loss of a loved one, our experienced team is here to help.

If you have questions about what will happen to your bank accounts or other assets after your death, contact Jennrich Law today to schedule a consultation. Together, we can create an estate plan that protects the people who matter most.