Steps to taking control of bank accounts
Identify any bank accounts by referring to the will and/or trust documents.
For bank accounts in the will, the executor should contact the bank to notify them.
In probate, it is best to open a probate checking account to transfer the funds into.
Joint account holders and beneficiaries of payable-on-death accounts should contact the bank themselves to take ownership.
When someone close to you passes away, you may be concerned about how to manage and secure their personal finances. Take heart in knowing that you are far from the first person to find yourself in this situation. There are steps and protocols in place to handle everything safely and securely, and to protect you and your loved one’s name, assets and financial legacy.
If you find yourself struggling, remember that you don’t have to go it alone. Enlist the help of friends, family, or experienced professionals, like an estate lawyer or personal accountant, who can assist you through the process of making sure sure your loved one’s assets are kept safe and handled appropriately.
Getting access to accounts
When taking charge of your loved one’s assets, a good first step is to consult the will and/or any trust documents. In addition to naming the executor and beneficiaries, a will often outlines where assets are held.
If you are the executor of the estate, it will be your responsibility to contact the bank, inform them of your loved one’s death, and provide them with a copy of the death certificate. The accounts will be frozen pending the start of probate, when you are officially named executor and can access the funds.
Once probate begins, you will be allowed access to the accounts; the bank will require proof that you are who you say you are and that you have the right to access these assets. They may ask you to show a government-issued ID, like a drivers license or passport, along with a copy of the letters testamentary appointing you the executor.
In the event your loved one died without a will, their assets will still be protected. The state will appoint someone to settle the estate, known as an administrator, and the administrator can access the accounts in exactly the same way an executor would.
Opening a probate checking account
Once the bank gives you access, can close your loved one’s existing accounts and move the money into a new account that you will open in the name of the estate, whether at that bank or another bank of your choosing. This account, known as a probate checking account or estate bank account, is specifically for handling immediate estate expenses like urgent bills, taxes, or any fees incurred during the probate process, as well as for paying off all of your loved one's debts as part of probate.
Any money generated by the estate—through an estate sale or sale of the house, for example—along with any outstanding money owed to your loved one, should be deposited directly into this estate account.
It is very important to keep estate finances separate from personal finances while going through probate.
In order to open the account, you will need to contact the IRS to have them issue a taxpayer ID number specifically for the estate. This number ensures that the IRS registers the estate as its own financial entity, as a taxpayer separate from you, your loved one, or anyone else.
You can request this new ID number on the IRS website by filling out the Application for Employer Identification Number, IRS Form SS-4. If you prefer, you can also call the IRS and they will give you a taxpayer ID number over the phone that you can start using immediately. Be aware that if you do get this number over the phone, you must write it down on Form SS-4 and then fax or mail it back directly to the IRS so they have all the appropriate records in place. It’s also possible to do this process through the regular mail, but it will likely take about a month to get your new number this way, so be careful about the time gap if you are under any deadlines.
Whether you choose to open a probate checking account or not, It is very important that you keep all of the estate finances separate from your personal finances while going through the probate process; if there’s any confusion, you may be held liable for mishandling funds. It’s also a good idea to keep thorough records of any and all estate-related expenses so you can protect yourself and your loved one’s assets in case there are any issues, confusion, or disputes down the line.
Passing funds on to beneficiaries
In most cases in which an estate goes through the full probate process, any accounts will be closed and the funds transferred to an estate account, and eventually from there to specific beneficiaries or heirs. If someone is named in the will as the sole beneficiary of a particular account, they will not receive the account itself, but rather the amount of the funds in the account at the close of probate.
Depending on the size of the estate and local laws, your loved one’s estate may qualify to bypass regular probate procedures, and any assets or property can be claimed through a simplified process. If you are named as the sole beneficiary of an account in the will, you may simply be able to swear that you are entitled to the account under state law and then you can receive the money directly.
If any of your loved one’s accounts were designated as payable on death and your loved one was the sole account holder, the money in those accounts will go directly to their named beneficiaries, bypassing probate and estate accounts altogether. The funds are generally disbursed through an electronic transfer or a certified check. Depending on the institution, this transaction can be done in person at one of the bank’s locations, through the mail, or even online, though specific documents such as the death certificate will likely be required in any scenario.
After the transfer of all assets out of an account, the bank typically closes it. If they don’t automatically supply it, you can ask the bank to provide you with documentation that the funds were disbursed and the account was closed. This record is good to have on hand in case any issues come up in the future.
Jointly-owned accounts are often designated as having automatic rights of survivorship, so if one person passes away, the surviving account owner will become the sole owner of the account. Often the survivor will simply need to notify the financial institution and present necessary documents to have their co-owner’s name removed from the account. However, some banks will freeze an account when one of the account holders dies. It’s important to check the type of joint account and the bank’s policies in this particular situation.
Making financial decisions can be overwhelming under the best of circumstances, but trying to do so while you are navigating the grieving process can make things even more difficult. Taking your time, staying organized, and calling on support from friends, family, and relatives is the best way to make sure your loved one’s financial affairs are handled responsibly.
You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.
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