When people die, you need to close their bank accounts. This is usually done by the executor of the will. If there is no will, it should be done by a court-appointed administrator who is usually a spouse, close family member or the major beneficiary of the deceased's estate. You'll need proof that you have the authority to deal with the deceased's assets before you can speak to the bank.
How to Close a Joint Account
If the account is joint, the surviving owner is authorized to close the account on her own. No death certificate or special paperwork is needed, just valid identification and the signature of the account holder named on the account paperwork. Joint accounts must have a zero balance in order to close them, so you will need to withdraw the account funds as cash or transfer the balance to another account first. If you are closing a checking or savings account, be sure to cancel any automatic payments – pensions, Social Security, dividends and so on. The bank may charge fees if payments are posted after the account is closed.
How to Close a Single Holder Account
Single-holder accounts are harder to close. Each bank will have its own procedures but generally, you'll need to provide a copy of the death certificate and proof that you have the authority to close the bank account. You can achieve this by taking a copy of the will and documents from the probate court that appoint you as executor. The bank will not usually close the account until the estate has gone through probate.
If there is no will, then a relative or legal representative must ask the court for permission to close the deceased's bank accounts. The court will issue a document called "Letters of Administration." Take this to the bank, along with some photo identification to prove who you are, and ask to close the account.
Read More: How to Close an Estate Account
What Happens to the Money?
Notifying the bank the account holder has died will freeze the account. What happens next depends on the size of the estate. In most cases, the executor or administrator will open a bank account in the name of the estate. This will be called something like "Estate of John P. Doe, Deceased, by Jane R. Smith, executor." To open an estate account, you'll need to get a taxpayer ID number from the Internal Revenue Service. Apply using IRS Form SS-4, Application for Employer Identification Number. Clearly, you're not an employer, but this is the form you need.
Once you've opened the account, you can request to transfer the funds from the deceased's bank accounts to it. You'll use the estate account as a central repository to gather cash, pay taxes, settle bills and start making transfers to the deceased's beneficiaries.
Streamlined Rules for Small Estates
If the value of the deceased's assets is small enough to qualify as a "small estate," then you have the option of using a simplified probate procedure. Rules vary by state but generally, the beneficiary will prepare a sworn statement stating that she is entitled to the money in the bank accounts under the deceased's will or state law. The bank should release the money on receipt of the affidavit.
The exact definition of a small estate depends on state law. In California, for example, you can use the out-of-court affidavit procedure if the value of the estate is no more than $150,000. Michigan has a similar procedure for estates valued at less than $15,000. Put a call in to the local probate court to find out the small estate qualifications in your state, although keep in mind that the court employees cannot give you legal advice. If you need extra help, contact a probate attorney.
- If the state law requires any court filing to authorize the use of the small estate affidavit, you should consult with an attorney to assist you with this procedure.
- If there are multiple beneficiaries of the deceased's estate, and you suspect there may be disputes from one or more of them, you should consider probating the estate so as to avoid any future claims by a beneficiary against you. The probate court procedure will be the beneficiary's forum for raising any dispute and your protection against any criticism of your actions.
Jayne Thompson earned an LL.B. in Law and Business Administration from the University of Birmingham and an LL.M. in International Law from the University of East London. She practiced in various “Big Law” firms before launching a career as a commercial writer. Her work has appeared on numerous legal blogs including Quittance, Upcounsel and Medical Negligence Experts.