What Is a Deceased Account?

A deceased account is a bank account, such as a savings or checking account, owned by a deceased person. When a bank receives notice that a customer has died, it will freeze the account(s) while waiting for direction from the authorized court regarding payment to heirs and creditors.

Key Takeaways

  • A deceased account is a bank account owned by a deceased person.
  • Banks freeze access to deceased accounts, such as savings or checking accounts, pending direction from an authorized court.
  • Generally, banks cannot close a deceased account until after the person's estate has gone through probate.
  • Joint accounts that are held jointly with a surviving owner are not considered deceased accounts; ownership of these accounts reverts to the surviving owner.
  • If the account is a pay-on-death account, the bank will not freeze the account; instead, the bank will release the funds to the named beneficiary when provided with the deceased's death certificate.

Understanding Deceased Accounts

When an account holder dies, the next of kin must notify their banks of the death. This is usually done by delivering a certified copy of the death certificate to the bank, along with the deceased’s name and Social Security number, plus bank account numbers, and other information. The bank may require other documents, including court-issued letters testamentary or letters of administration naming an executor or administrator of the deceased’s estate.

Joint Accounts and Pay-on-Death Accounts

Accounts that the deceased held jointly with a surviving heir are not considered deceased accounts. Ownership of these accounts reverts to the surviving owner, who may close the account or continue to use it. If the account is a pay-on-death account, the bank should release the money to the named beneficiary when provided with a certified copy of the deceased’s death certificate and when the named beneficiary produces adequate identification.

Powers of Attorney on Deceased Accounts

Power of attorney arrangements end when the person dies. This means that a survivor may have held a power of attorney that allowed them to access an account when the account holder was still alive, but they’ll no longer have access once the bank has been notified of the account holder’s death.

Trustees of Deceased Accounts

Trustees named before the death of the account holder should be able to access the deceased account. A trustee is responsible for administering the deceased person's assets and has a fiduciary responsibility to act in the best interests of the beneficiaries. To access the deceased account, trustees will need the proper documentation, including identification and a copy of the trustee provision.

Closing Deceased Accounts

Usually, a bank cannot close a deceased account until after the person’s estate has gone through probate. The probate court will appoint an executor or administrator if one is not named in the deceased’s will. This person will have the authority to close the deceased accounts and distribute the funds therein to heirs and creditors.

Deceased Alert

A deceased alert notifies credit card companies that an account holder has died. Credit reporting agencies, such as Equifax, Experian, and TransUnion, will issue an alert, which appears on the person's credit report. The alert informs credit card companies to deny credit transactions to the person going forward. The deceased person's family or executor should contact the credit bureaus to ensure a deceased alert is placed on the person's credit report.

It's important to place an alert on a deceased person's credit report to prevent identity thieves from using the person's identity for financial gain.

Special Considerations

Bank personnel are typically restricted from providing much practical advice to heirs regarding how to handle the affairs of a deceased customer's account, although some banks do have estate units. It is advisable to obtain legal assistance or contact the appropriate court for direction regarding how to handle a deceased person’s bank accounts.