A loved one passing away is never easy and the grief can be overwhelming. Along with coping with their loss, there is also the challenge of managing their affairs, including finances.
Immediate concerns often arise regarding the bank accounts left behind by the decedent. The most common question asked is, what happens to the money in their bank accounts?
In California, the answer depends on several factors established prior to their death.
- Was there an estate plan in place?
- What type of bank account was set up?
- Were any beneficiaries designated?
When someone dies with money in the bank, it’s crucial to verify the information above to determine how to access it. Understanding the legal and financial steps ensures funds are managed properly and distributed as the deceased wished.
Finding the owner
The first step in handling a late individual’s bank account is to get confirmation on ownership and whether an estate plan exists. If the person had a living trust their bank accounts might be included, allowing for a smooth transfer of assets without court intervention. However, if no legal documents are in place, the process becomes drawn out and complex.
Some bank accounts have a payable-on-death (POD) designation, meaning a named beneficiary can access the funds directly. This is quicker and easier than if no beneficiary is listed whereby the account becomes part of the deceased’s estate and goes through probate. Which means the court decides how to distribute the money. Before funds are distributed any debts and taxes owed by the decedent must be settled. If the estate is small or if certain legal exceptions apply probate might be avoided.
Are you the beneficiary?
For those wondering what happens to bank accounts after someone dies, the next step is determining whether you are entitled to the funds. A beneficiary is someone named in a will, trust or directly on the bank account as the recipient of the money.
Finding out if you are the beneficiary of someone’s estate can be accomplished by checking their existing estate planning documents, such as trusts and wills. Or it can also be done by visiting the bank. If you are listed as a beneficiary, you must present documentation such as a certified death certificate and government-issued ID to claim the funds. The distribution of their assets will be overseen by the court if the account is subject to probate, which can be a lengthy process.
When handling a loved one’s estate you may be unsure of what to do when someone dies in California. In that case, it is essential to follow the state’s legal requirements for transferring assets. Whether the money is accessible or in probate, knowing the steps ensures a smooth transfer of assets to the heirs.
Sole-Owned Bank Accounts
For bank accounts solely owned by the deceased, the process depends on whether there is a named beneficiary or a valid will. This is what happens:
- Accounts With a Named Beneficiary: If the deceased had designated a beneficiary through a payable-on-death (POD) or transferable-on-death) bank provision, the funds in the account are directly transferred to the named beneficiary. This bypasses probate making it easier and quicker. To claim the funds the beneficiary needs to present a valid government-issued ID and a certified death certificate.
- Accounts Without a Named Beneficiary: If no beneficiary is listed, the account becomes part of the deceased’s estate. The executor of the estate will use the funds to settle debts, pay taxes and distribute any remaining money as directed by the will. In cases where there is no will, California’s intestate succession laws determine how the funds are distributed, often prioritizing close family members.
Joint Bank Accounts
If it was a joint account, the surviving account holder automatically assumes full ownership of the account. Probate is not required in such a case but it is best to confirm with the bank to ensure everything transitions smoothly.
When Does Probate Come Into Play?
Probate is the legal process whereby the court oversees the distribution of the deceased person’s assets. If an account has no joint owner or beneficiary designation, the designated beneficiary cannot be located, and it isn’t part of a trust, it becomes subject to probate. Additionally, if there is a dispute regarding the named beneficiary’s right to the account, such as allegations that the deceased was coerced into adding them as beneficiaries, the bank account may need to go through probate.
Finding Out if You Are a Beneficiary
If you believe you could be a beneficiary of the decedent’s bank account, you can confirm this by visiting the bank. You must present a certified death certificate and your government ID. The bank then verifies your beneficiary status, and if confirmed, the funds are released to you. If there isn’t a named beneficiary, you may need to work with the estate’s executor to determine your rights.
Can Executors Access Bank Accounts?
Executors can access bank accounts only when:
- The account lacks a joint owner or designated beneficiary
- It’s not part of a trust.
Executives typically need documents such as the death certificate, Letters Testamentary (issued during probate), and their government-issued ID to withdraw funds. All withdrawn funds must be accounted for and used exclusively to settle the estate.
If you are navigating the complexities of overseeing a loved one’s bank accounts after their passing, contact a dedicated California probate attorney today to schedule a consultation.