What Happens to a Person's Bank Account When They Die Without a Will?

Unfortunately, your loved ones have no say in the matter, and your wishes for how you’d like to see your belongings distributed won’t be taken into account.

Posted on November 24, 2021 by Davide Pisanu
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Dying without a will can leave your estate and your loved ones in a lurch. Unfortunately, it’s not uncommon: In both the United States and Canada, only less than half of those surveyed said they had a will. If you die without a will, you’re considered to have died “intestate.” What that means is that the way your estate is now divided up will follow pre-established state guidelines. Your loved ones have no say in the matter, and your wishes for how you’d like to see your belongings distributed won’t be taken into account.

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PODs and Joint Accounts

When it comes to your bank accounts, there are specific rules that fall into place to determine who inherits the funds or how they should be dealt with. In some cases, the beneficiary to the account is already established through a POD (Payable on Death) agreement made between the account holder and the bank, wherein a named beneficiary receives the funds after the account holder’s death. Since this transfer doesn’t need to take place within the context of probate, it also doesn’t require a will.

The same goes for bank accounts that are jointly held with a right of survivorship. What this means is that the account is equally shared by two people, and if one of the account holders dies then their share automatically transfers over to the remaining account holder. A will is not necessary in this case either.

Bank Accounts that Form Part of the Estate

However, if neither of the above situations apply and no beneficiaries have been named, then the account—or rather, the contents of the account—form part of the deceased’s estate and are dealt with according to official laws of inheritance that kick in when someone dies intestate.

Keep in mind that an executor named by the probate court to deal with the deceased’s estate will need to cover any debts and outstanding costs incurred by the estate with the estate’s funds, meaning that they may liquidate the bank accounts and use the funds to cover settlement costs. Whatever is left over is then distributed to beneficiaries, as set forth by specific laws.

There’s nothing quite like having peace of mind, and a good estate plan as well as a valid will will ensure that your loved ones will be taken care of exactly how you’ve envisioned it. Curious to learn more? Get in touch with ClearEstate for a free consultation today.