Writing a Will is one of the most important things you can do to care for your loved ones after your death. When your financial affairs are in order, it makes finalising your Estate straightforward for your surviving partner, children and/or next of kin.
While it is natural to think about how to distribute your Estate, or about charitable bequests you wish to make when writing your Will, it is also important to consider what needs to happen to manage any bank accounts you may hold.
Wondering what happens to a Deceased Estate bank account and how it may affect your loved ones in the future? Rose Lawyers can assist with the preparation of your Will. Call us today on 03 9878 5222 to discuss your plans.
What happens to bank accounts when you die
When you die, any bank accounts you have remains active until someone notifies your bank that you have died. Anyone can notify your bank, but the responsibility for this would usually fall to the next of kin or a representative of your Estate. The person notifying the bank may need to provide identification, and an original Death Certificate will likely be required for the bank's verification purposes. If there is a Will, this may need to be shown as well.
When making your Will, it is important to also make a list of any banks that you deal with and keep it in a place that is known to your Executor(s).
Making a list of your bank accounts make contacting your banks easier.
Making a list of bank accounts is part of putting your affairs in order, as it makes the task of contacting financial institutions and finalising your financial affairs far easier for your next of kin or Executor.
Once a bank has been notified of a death it will freeze that account. This means that no one - including a person who holds Power of Attorney - can withdraw the money from that account.
Paying funeral costs from your bank account
An exception to making a withdrawal transaction on a Deceased Estate bank account is a withdrawal to cover funeral costs. A bank will pay an amount from a Deceased Estate bank account to cover funeral expenses when an original funeral account or receipt is presented.
When you die and do not have a funeral plan in place or have money set aside specifically for your funeral, your loved ones can present a receipt for your funeral to your bank.
If the bank has not been notified of the death, then the effect of presenting the invoice for the funeral expenses is that your bank will distribute funds from your account to pay for your funeral expenses and then freeze your account.
What happens after my bank accounts have been frozen?
When a bank account has been frozen it means that no money can be taken out of this account. If you have direct debits, payments or automatic transactions set up on your account these will no longer go ahead once an account is frozen. Direct credit payments can still be accepted into a frozen bank account.
Note that if you hold any joint accounts with another person these can continue to operate after your death.
What happens to the money in my bank account?
Once the bank or financial institution is notified of a death they can release the assets of a deceased Estate bank account. The way in which funds are distributed will depend on whether or not you have a valid Will in place.
If you have a Will
When you die with a Will in place, any money you hold in bank accounts will be considered part of your Estate. Any funds you hold in bank accounts will be distributed according to your wishes. Whether you need to obtain a Grant of Probate for the bank to release the funds will depend on the size of your Estate and the willingness of the bank to release the funds.
If you do not have a Will
If you do not have a Will in place any money remaining in your bank accounts will be distributed to the Administrator of the Estate. If you Estate is small enough that your do not need to apply for Letters of Administration, then the bank may, at its discretion, release the funds to your Next of Kin.
If you have any credit card debts or personal loan debts these amounts will be paid from your bank account before being transferred to your Next of Kin or Estate Administrator.
Make your valid Will today with Rose Lawyers
Ensure that you have considered everything and made allowances for all of your bank accounts in your Will. Rose Lawyers can assist you in writing your Will and are here to guide you through every step of the process. We want to ensure that your matters are handled according to your wishes.