When someone dies, one of the practical questions their family or executor may face is what happens to the money in their bank accounts.
Can the executor access the money? Does the account form part of the estate? What happens if the account is held jointly with someone else?
The answer depends on several factors, including how the account is owned, whether there is a surviving joint account holder and the requirements of the particular financial institution.
Understanding what happens to a deceased person’s bank accounts can help executors determine which funds form part of the estate and how they should be dealt with during the estate administration.
How Are Bank Accounts Handled After a Death?
When a bank learns that an account holder has died, it will generally need documentation before allowing someone to access or close an account held solely in the deceased person’s name.
The executor will usually need to notify the financial institution of the death and determine what the bank requires before it will release the funds.
Those requirements can vary between financial institutions. Depending on the value of the account and the circumstances of the estate, a bank may require a death certificate, a copy of the Will, identification from the executor and, in some cases, a grant of probate.
If probate is required, the bank may not release the funds to the executor until the grant has been issued.
Does Money in a Bank Account Form Part of the Estate?
If a bank account was held solely in the deceased person’s name, the money in the account will generally form part of their estate.
The executor has a number of responsibilities when administering an estate, including identifying the deceased person’s assets and liabilities and taking control of estate assets.
Once the executor is able to access the account, the funds are not simply divided immediately among the beneficiaries. Estate money may first be needed to pay debts, taxes, funeral expenses, legal and administrative costs and other obligations of the estate.
The remaining estate can ultimately be distributed according to the deceased person’s Will or, if there is no valid Will, according to British Columbia’s intestacy rules.
Does an Executor Need Probate to Access a Bank Account?
Not always.
Whether an executor needs a grant of probate before a financial institution will release funds depends on the circumstances and the financial institution’s own requirements.
For smaller estates, probate may not always be necessary. In British Columbia, an estate valued at $25,000 or less is not subject to probate fees. Financial institutions may also have their own policies for releasing smaller amounts without requiring the executor to obtain a grant of probate.
However, the $25,000 threshold does not mean that every bank is required to release an account containing less than $25,000 without probate. The financial institution may still require particular documents or additional assurances before releasing the funds.
An executor should therefore contact each financial institution directly to determine what is required before accessing an account held solely in the deceased person’s name.
What Happens to a Joint Bank Account When Someone Dies?
Joint bank accounts are treated differently from accounts held solely in the deceased person’s name.
Many joint accounts are set up with a right of survivorship. This generally means that when one joint owner dies, the surviving joint owner receives the deceased person’s legal interest in the account rather than the account being dealt with in the same way as an account held solely in the deceased person’s name.
However, joint ownership can sometimes be more complicated than it appears. The fact that someone is named as a joint account holder does not always determine who is ultimately entitled to the money in the account.
The circumstances surrounding the account and the deceased person’s intentions may also be important.
What If the Joint Account Was Held With a Spouse?
Many couples hold bank accounts jointly with a right of survivorship. When one spouse dies, the surviving joint account holder will generally become the legal owner of the account through the right of survivorship, rather than the account passing through the deceased spouse’s estate.
This can allow the surviving spouse to continue accessing the account without waiting for the executor to obtain probate.
For couples who intentionally maintain a joint account for their shared use and intend the surviving spouse to receive the account on death, this can provide a relatively straightforward transition.
However, if there is uncertainty or a dispute about ownership of the funds, the circumstances surrounding the account and the deceased person’s intentions may still need to be considered.
What If a Parent Has a Joint Account With an Adult Child?
Joint accounts between a parent and an adult child can be more complicated.
A parent may add a child to an account so the child can help with banking and day-to-day finances, or the parent may intend for the child to receive the money remaining in the account after their death.
Simply being named as a joint account holder does not always determine who is ultimately entitled to the funds. The deceased person’s intention when the account was made joint can be particularly important.
These situations can involve the law of resulting trusts and jointly held assets, which may determine whether the surviving child is entitled to keep the funds or whether they should instead form part of the parent’s estate. The presumption in the law in the absence of any evidence is that an account belonging to a parent with a child added as joint owner must be distributed as part of that parent’s estate after death.
If there is uncertainty about the ownership of a joint account after a parent dies, legal advice may be appropriate before the funds are distributed.
What Happens to Beneficiary Designated Accounts After Death?
Beneficiary‑designated accounts generally pass outside the estate and go directly to the person named on the account. When the account holder dies, the financial institution pays the balance to the designated beneficiary once a death certificate is provided.
This bypasses probate, offering faster access, lower fees, and greater privacy. The will does not control these assets—beneficiary designations override it.
If no beneficiary is named, or the beneficiary has predeceased the owner without a contingent listed, the account falls into the estate and is distributed under the will.
There are some poorly reasoned judgements that say beneficiary designations can sometime be subject to a resulting trust, but those cases are largely ignored in practice.
For registered accounts like RRSPs and RRIFs, tax treatment depends on who is named: spouses may receive tax‑deferred rollovers, while non‑dependent adult children and any other beneficiary typically trigger tax on the deceased’s final return even though they receive the funds directly. This often results in a huge tax bill after death. Because outdated or poorly structured designations can cause unintended results, they should be reviewed regularly and coordinated with the overall estate plan.
Can an Executor Use Money From the Deceased’s Bank Account?
Generally, financial institutions freeze a deceased’s accounts after they are informed of the death. Once an executor has the necessary authority and access to estate funds, those funds can be used for legitimate estate purposes. That said, often banks will allow large bills such as probate fees, lawyer fees and property tax to be paid out of the deceased’s frozen accounts prior to the grant of probate.
An executor should keep clear records of money received and expenses paid from the estate. Estate funds should also be kept separate from the executor’s personal money.
Executors have a duty to account to beneficiaries and others to whom they owe a legal duty, so maintaining accurate financial records throughout the administration is important.
What Happens to Automatic Payments and Deposits?
A deceased person’s bank account may still have automatic payments or deposits connected to it. These automatic payments may be shut off once a bank account is frozen.
The executor should identify recurring transactions and determine which services, subscriptions and payments need to be cancelled or changed. Government benefits, pensions or other deposits may also need to be addressed.
This is another reason it can be helpful to review bank statements carefully rather than immediately closing an account. Statements may help the executor identify assets, debts, insurance payments, subscriptions and other financial arrangements that need attention.
At the same time, accounts should not simply continue operating as though the deceased person were still alive. Banks, government agencies and other relevant organizations should be notified of the death as appropriate.
What If You Discover a Bank Account Later?
It is not unusual for an executor to discover an account or other asset after the estate administration has already begun.
If another bank account is discovered, the executor will need to determine its value, how it was owned and whether it forms part of the estate.
Depending on when the account is discovered and whether probate has already been obtained, additional steps may be required before the executor can deal with the newly discovered funds.
Discovering another asset does not necessarily mean starting the entire estate administration again, but it is important to deal with the asset properly before the estate is considered complete.
Bank Accounts Are an Important Part of Estate Administration
Bank accounts may appear to be among the simplest assets in an estate, but questions about probate, joint ownership and rights of survivorship can sometimes make them more complicated than expected.
Accounts held solely in the deceased person’s name without a beneficiary designation will generally form part of the estate, while jointly held accounts require consideration of how the account was structured and, in some circumstances, the deceased person’s intentions.
For executors, identifying the deceased person’s accounts and determining how each one should be treated is an important part of administering the estate.
Need Help Administering an Estate in BC?
At Westcoast Wills & Estates, our probate and estate lawyers assist executors, beneficiaries and families across North Vancouver, Vancouver, Burnaby, Surrey, Richmond and surrounding communities with identifying and administering estate assets, obtaining probate and distributing estates in British Columbia.
If you are acting as an executor or have questions about how a bank account should be treated after someone dies, contact our team to discuss how we can help.
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