What Happens to a Bank Account When Someone Dies Without a Beneficiary?

Bank account beneficiary rules

Generally speaking, when an individual dies, their estate will be distributed according to the terms laid out in their will. There are certain circumstances, however, in which bank accounts controlled by the deceased are divided outside of the probate process. Jointly held accounts and accounts with designated beneficiaries are divided according to different standards and guidelines.

Joint accounts

Joint accounts are simply bank accounts with multiple owners, and when an account holder dies, the assets are most commonly distributed based on something known as rights of survivorship. Under this model of joint ownership, the remaining funds in the account are distributed to the remaining joint account holders upon the death of the owner.

A less common form of joint account is an arrangement known as tenancy in common, in which the heirs of the deceased receive a portion of the funds in the account equal to the share controlled by the owner who died.

In either case, most states require the presentation of a death certificate to the bank holding the funds before they can be distributed to the account’s co-owners or rightful heirs.

Accounts with designated beneficiaries

A designated beneficiary is an individual named by the deceased who will receive the funds in the account upon the original owner’s death. These types of accounts, often known as a payable-on-death (POD), bypass the probate process, which is desirable for some individuals as it saves on legal fees and affords a higher level of privacy to the beneficiaries of the deceased’s estate.

As with a joint account, the recipient of the funds in these types of accounts is usually required to furnish a death certificate and their own identification before the funds can be released to them.

Marital assets

The division of a married couple’s bank accounts following the death of a spouse depends largely on location and can be a tricky process to navigate depending on the number of shared accounts and the details included in the deceased partner’s will. Even if you are both young and in good health, it’s smart to talk to your spouse about plans for your estate when you die.

In some states, including California, Texas, Wisconsin, and others, shared assets are known as “community property,” to which the surviving spouse is entitled to at least half. Other states have their own standards for how much, if any, of the assets must be set aside for the surviving member of the marriage. Places like North Carolina have guidelines for percentages based on the length of the marriage, while other states leave the division entirely up to the terms of the deceased party’s will.

These requirements are established minimums only—a partner can always leave more than the state-mandated percentage of their assets to their spouse in the will if they so desire.

Bank accounts without beneficiaries

In cases where there are no joint account owners or designated beneficiaries, distributing the deceased’s estate assets can be more complicated and often involves navigating the probate process.

Generally speaking, undesignated bank accounts are wrapped into the rest of the deceased’s estate and will be distributed according to the terms of their will or state laws by the executor or administrator of their estate. These funds are also used to settle existing debts and obligations on behalf of the deceased before the accounts are fully distributed to the deceased’s designated heirs.

Because the probate process can be lengthy and expensive, many individuals choose to designate beneficiaries ahead of time in the event of their death. Not every account has named beneficiaries, though, and so the probate process is unavoidable in some instances. 

Special considerations for bank account funds

The size and complexity of an individual’s estate will dictate the amount of time and effort necessary to settle their affairs after the account holder’s death. In some cases, the process is very quick and straightforward, and in others, it can be an arduous, hotly contested legal process.

There are certain exceptions and special considerations that must be made when navigating certain wills and estate laws, and the way these cases are handled often varies from state to state.

Trusts

A trust is a financial arrangement in which an individual designates a third party to manage an asset or assets for the arrangement’s beneficiary. When the individual who forms the trust, known as the grantor, dies, the third party is responsible for distributing the assets as laid out in the terms of the trust.

While similar to a POD account, a trust employs a separate person or entity to manage the assets and their transfer to the beneficiary. While a POD account is simpler and typically cheaper, many people choose to leave their assets in a trust for their beneficiaries as an added measure of certainty that the assets will be distributed according to their wishes. In addition to helping you create a will, LegalZoom can also assist with setting up a trust for your loved ones.

Like a POD or jointly held account, a trust typically allows the family and other beneficiaries of the deceased to avoid the probate process.

Small estates

In cases where an estate’s total value is below a certain threshold, it may be possible to file a document called a “small estate affidavit.” This document allows beneficiaries to claim the entirety of the deceased’s estate accounts if their total value is within the designated limit.

The threshold under which an inheritance is deemed a small estate varies from state to state and, in some cases, may also be further restricted by individual banking institutions’ policies. If you wish to claim ownership of an individual’s assets under a small estate provision, it’s important to confirm the accounts meet the requirements at both the state level and the institutional level.

Debts and liabilities

While an individual may have considerable assets in accounts without designated beneficiaries upon their death, all of that money does not automatically transfer to the people named in the will or identified by state law.

An important part of the probate process involves identifying outstanding debts and financial obligations for the deceased. These debts are typically paid out of the individual’s accounts prior to the division of the remaining funds to their rightful heirs.

What to do with a bank account when someone dies without a will

If you are involved in the process of settling an estate for someone close to you, there are a few basic steps you should follow to ensure the will is executed properly and expeditiously. 

1. Gather necessary documentation. In most cases, funds cannot be released without a number of important documents. At the very least, you’ll need a copy of a death certificate, your own personal identification, and current account statements for the accounts in question.
2. Notify the bank. Once you have your documents in order, contact the financial institution to let them know the account holder has died, and you intend to claim the assets or distribute them according to the terms of the individual’s will or state laws.
3. Understand the process. Make sure the terms laid out by the bank are aligned with your understanding of your rights and responsibilities relating to the estate. If something doesn’t match up, ask the bank about it or consider getting an outside opinion.
4. Consult legal professionals. The probate process can be taxing, especially in cases where the deceased was family or a loved one. There are many legal professionals who specialize in estate settlement who will be better equipped to navigate the process during your time of grief.

Start estate planning for your bank accounts

One of the best ways to avoid complications with the settling of your own estate is by planning ahead. No matter your age or lifestyle, it’s never too early to start thinking about what will happen to your assets once you die. If you haven’t already, consider naming beneficiaries or adding a second account holder to your bank accounts if appropriate. Certain individuals might benefit from establishing a trust, as well.

If you’re seeking legal advice about how to start the estate planning process, LegalZoom’s team of attorneys can help you get on the right track and prepare for any future scenario. Just answer a few questions, and let our estate services team help you determine what sort of financial arrangements are best for you and your unique circumstances.

FAQs

How long does it take to access a deceased person's bank account?

The speed with which an individual’s bank account can be distributed following their death depends largely on how the account is structured and the terms of the deceased’s will. In cases where the account has joint owners or named beneficiaries, the funds can be accessed as soon as a death certificate is available—usually just a couple of weeks in most states.

In more complicated situations, it can take a good deal longer. If an estate goes to probate court, the process can stretch on for months or even years in particularly intricate cases.

Who can access a deceased person’s bank account?

If there are joint owners or designated beneficiaries, those individuals can access the bank accounts in question upon presentation of a death certificate and valid personal ID. Otherwise, the executor of the deceased person’s estate is responsible for dividing the assets contained within the accounts. 

Can I withdraw money from someone’s bank account after their death?

Not unless you are the executor of the estate or the joint owner of the account, no. Oftentimes a bank will freeze any accounts associated with a deceased individual once they are notified of the death.

How do I find the bank accounts of someone who died?

In many cases, the accounts will be detailed in the person’s will and trusts. In cases where these documents aren’t available, or in which there are especially complicated financial situations for the deceased, it may be necessary to search through personal files or to reach out to banks directly for assistance in identifying the deceased’s accounts.