What happens to private bank accounts when you die?
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Updated: July 30, 2023
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When you exit this life, what happens with your assets? The answer depends on whether you prepared and planned ahead of time by creating a will and naming beneficiaries. We show you the various scenarios and how they can play out.
Despite knowing we will all die at some point, Canadians are ill-prepared for their exit. It’s estimated more than half of us don’t have a legal will in place, which can make dealing with your affairs very messy. Your loved ones will be left to figure out how to deal with your estate, such as any assets you have. That includes everything from your vintage Rolex to your investments to any cash in your bank accounts. In this story, we’ll do a deep dive into what happens to your bank accounts when you die. The answers may not be what you expect.
What happens to private bank accounts when you die?
There are two main ways your private bank accounts may be handled. One is simple and straightforward and the other one is much more complicated. Let’s take a look.
If you have a will
Congratulations! You’ve made things easier for your loved ones if you have pre-planned and created a legal will, either through a lawyer or an online platform, an easy and inexpensive option. In the process of creating your will, you’ll name an executor –someone you trust to manage your affairs. Their duties might include making sure your final wishes are carried out, from whether you want to be cremated or buried and what your funeral will be like, to ensuring your beneficiaries receive the assets you’ve designated for them.
When you die, your executor should let your bank know right away and also provide proof (i.e. a death certificate). While the probate process is underway – one in which your will is assessed for its legality and administration tasks related to your estate are carried out – funds in your bank accounts will temporarily be put on hold. At this time, the bank will make funds available to pay certain bills, such as funeral costs, personal loans and credit cards. This ensures your loved ones aren’t stuck with having to cover those expenses out of their pockets while the probate process is conducted.
Once completed, your bank will close your account and transfer any remaining funds to your estate – a term that encompasses everything you owned. From that stash, any other uninsured debts will be paid. Whatever is left over once all creditors have been paid is distributed among the beneficiaries named in your will.
If you don’t have a will
Let’s say you’re like half of Canadians and never made a will. When you die, what happens to your bank account (and everything else) is determined by the laws set by provincial governments. Without a legal will in place, you will be considered to have died intestate.
That means your assets will be distributed according to the intestate laws in your province. While they differ across Canada, any money left in your bank accounts will go to immediate family and blood relatives. One important note: Your common-law partner may be left out in the cold and not be eligible to receive funds or assets, if you haven’t made prior legal arrangements, like creating a will or naming them the beneficiary of the account.
In the absence of a will, the province will appoint an estate trustee – someone who will act on your behalf to manage your affairs. Relatives or the common-law partner of the deceased may apply to become an estate trustee if the court and the immediate family agree to it.
The estate trustee informs the bank of your death and supplies legal proof (i.e. a death certificate) to start the process of dealing with the money in your bank account. Your account will be frozen or closed as the probate process occurs. During that time, the funds will be inaccessible. Once probate is complete, the money becomes part of your estate. That will likely take longer than it would if there was a legal will.
Debts owed to creditors will be paid from your estate. Then, once those debts have been taken care of, the cash in your bank account will go to your immediate family, blood relatives, or spouse. Provincial laws vary. In Ontario, for example, if you’re not married and don’t have kids, your money may go to your parents.
What happens to joint bank accounts if you die?
So much depends on the other person who you’ve shared your joint account with. If it was your spouse, the ownership of the bank account and its contents automatically go to him or her. Most bank accounts, including chequing accounts and high-interest accounts, have a right to survivorship feature which makes this transfer possible. This can occur between spouses even if there is no will because of the right of survivorship clause you’ll sign with the bank when you open your joint account. These funds remain separate and do not become separate from your estate.
If your joint bank account is not co-owned by your spouse, the right of survivorship does not apply, even if that other person is your common-law partner or child. Unless you have sufficient documentation to switch ownership of the bank account to that person in the event of your death, the account and its funds will be frozen or closed. Then the steps as outlined above are followed – appointment of an estate trustee by the province, probate process, and then transfer of the money in the bank account to the estate for disbursement.
When you do open up a joint bank account, look for one that offers you the best interest rates and the best perks possible.
How to access or close the bank account of a deceased person
Your bank will help you access the bank account of your dearly departed, based on what type of account you have, who has been named beneficiary and whether you have been named executor in their will. To close accounts, your bank needs account numbers, a death certificate, a copy of the will, and proof of executor status, if applicable.
How to avoid complications/problems
The answer is very straightforward – create a legal will, either through a lawyer or an online platform like Willful. A will allows you to decide what happens to your estate, including your bank account and all other assets, when you die. Having a will is the simplest and most hassle-free way for your survivors to manage the affairs of the deceased when they’re gone.
Frequently asked questions
Do you have to notify the bank when someone dies?+
Yes, you do. The bank needs to know so that the deceased person’s estate can be settled and the bank account can be closed. You will be asked for a death certificate, copy of the will, and/or proof of executor status.
What happens if no beneficiary is named on the bank account?+
In lieu of a beneficiary, the funds will become part of the deceased person’s estate. A legal will determines who gets the funds. When there’s no will, an estate trustee or administrator will allocate the funds based on provincial laws.
Can I access my husband’s bank account if he dies?+
Yes, in a couple of cases. If you have a joint bank account with your spouse, you will assume sole ownership and be able to continue using the account. You can also access the bank account if you are the executor as outlined in your spouse’s will.
Can you withdraw money from a deceased person's account?+
Yes, you can if it is a joint account that is shared with a spouse. If it isn’t, then no, unless a right to survivorship has been set up with the bank in advance. If you’re worried about covering funeral costs and covering bills like personal loans or credit cards, keep in mind the bank will allow access to the deceased person’s bank account to take care of those expenses.
The Last Word
Having a will in place is the kindest thing you can do for your loved ones after you depart this earthy life. It reduces the amount of stress they experience when trying to settle your affairs and disburse your assets. A legal will also make your final wishes crystal clear and prevents the government from making decisions with your estate you didn’t want. Create a will. Do it today. No excuses.