What happens to a bank account when someone dies?

When someone dies, aside from the grief caused by their departure, their absence can also bring further difficulties, such as financial hardship or disarray in finances. The use of wills can make this process easier, but the process is not always straightforward, especially if they had money in multiple places, both domestically and abroad.

Access to a person’s bank account can be one source of difficulty, as they might have been the only one with access to this account, and their account might be tied to mortgage payments or other debts, or even continue to pay for services that aren’t needed.

When someone dies, there are two scenarios that could arise upon the account holder’s death.

• The account is left dormant, and eventually frozen by the bank
• The executor will contact the bank and notify them of the death

If the account is left dormant

Different banks have different times for this, but generally speaking, a bank will close an account that has been inactive for three to five years – some can be as soon as one year.

It depends on the type of account, as well as the funds within it. A bank will attempt to notify the account holder any way they can long before this happens, and any amount of activity in the account will notify the bank that the account is still active.

Inactive bank accounts can happen for various reasons. If the account holder dies and is unaccounted for as a person, then the account may never be known to anyone. But on the other hand, even someone who is very well accounted for might have never spoken about the account to anyone, and in this case, the account might not be discovered.

What happens to the money?

For most countries, any money that is unaccounted for in this way will be returned to the crown or state. This process is known as an escheat. Once the account has been declared as inactive, it will be transferred over to the state and the money will be held as unclaimed assets.

Getting this money back is possible, but you will need to contact your state and begin the retrieval process, which can take a while if the assets were claimed a long time ago.

Bear in mind too that the account may have been deducted dormant account fees, which is customary for some banks.

If the bank is notified by executor

Upon someone’s death, an executor will be required to notify the bank of any accounts held by the deceased. It’s not required by law to do this, but a deceased person is likely going to either have funds that are necessary for the executor, debts and loans that need to be paid, or be paying standing orders and direct debits, which obviously all need to be cancelled. The easiest way to do this is to contact the bank and notify them of the death.

Once notified, the bank will freeze the account. This will prevent any money from leaving the account, and will ensure that when the account is unfrozen, the money and responsibility will go to the right person. After the account has been frozen, the executor can then ask for the funds to be released, which will require something called a ‘Grant of Probate’. This is for the bank to check that they are releasing the funds to the right person.

Some banks allow executors to release a certain amount without a Grant of Probate, which will depend on amount in the account. The maximum amount can vary anywhere from £10,000 to £50,000, so check with your bank to see what their threshold is.

Joint accounts will generally not require any probate, and the account will continue as normal, which is why joint accounts are advised for partners and businesses. Therefore, if you want to make an account easy to handle after your death, make sure that it’s either a joint account with a trusted partner, or below the threshold that requires probate, so your funds can be released quickly without any problems or holdups.

How do international accounts work in probate?

International bank accounts can be a little more tricky to deal with. The same rules apply as above, but you will need to abide by the laws of the country the account is held in, which might not be the same as your own. There could also be additional legal and logistical issues to consider.

International bank accounts can also be a lot easier to be unidentified, and the bank might find it more difficult to contact you, so it’s important to make sure that all offshore accounts are accounted for.

Finding a good way to send money abroad can make probate with an international bank account a lot easier, as it can ensure that any outstanding debts or obligations are settled.

You might also need funds to help facilitate the transfer of assets from the deceased’s international bank account to their beneficiaries or heirs. This can help to streamline the probate process and ensure that the deceased’s assets are distributed properly and in time.

One of the benefits of being in the UK is that a UK will is accepted by many countries, so it will be a lot easier to have funds released by banks overseas. You can also use an International Will format, which can make probate a lot easier if you have assets in multiple countries.

With CurrencyTransfer, you can use our service to find the best deal for transferring your money abroad. In the case of probate, this could be essential, as you may need to send or transfer large amounts of money between countries.