How Your Savings Account Is Handled After You Die and What That Means for Your Family

It may be difficult to think about, but it’s important to plan for what will happen to your assets when you’re gone. Even if you don’t have a ton of cash to pass on, it will bring you peace of mind to know that your funds will end up in the right place, enjoyed by the beneficiaries you select.

When you die, your savings account will become part of your estate. The bank will handle your money according to how the account was established.

Here’s what you need to know.

What Happens to Your Savings Account After You Die

The money in your savings account won’t just disappear when you die. Your funds will have to be claimed or distributed—banks don’t automatically transfer funds to the next of kin.

The first step is someone needs to notify your bank that you’ve died. That someone can be a family member, legal representative, executor, beneficiary, or the Social Security Administration (SSA). They’ll need to provide the bank with a death certificate and other documents.

What happens next depends on how you’ve set up your account. If you haven’t listed a joint owner or beneficiary for your savings account, your bank will typically verify whether a will exists before distributing the funds.

If you have a will, your executor will use the money to pay off your debts, and any remaining cash will go to your beneficiaries. Your executor is responsible for managing your estate and administering your will, carrying out your last wishes.

If you don’t have a will, a probate court will decide how the inheritance gets distributed.

The Probate Process

Probate is a legal process that will validate your will in a court after your death. It ensures that your assets will be distributed to the correct beneficiaries. It also ensures that your debts and taxes are paid off.

The probate court will appoint an executor who will assume responsibility for your estate. The executor will oversee your assets. They will use your assets to pay your debts. The remaining assets will be distributed to your beneficiaries.

The probate process is complex, and the timeframe varies by state, ranging from a few months to over a year.

Bypassing Probate

The following options allow you to bypass the probate process, making it easier for your loved ones to access the funds in your account:

• Joint account: With a joint account, your co-owner has the right of survivorship, meaning they can continue using the account as long as they present your death certificate to the bank. Your name will be removed from the account and the co-owner will assume ownership of the account.
• Payable-on-death (POD) account: If you designate your savings account as a payable-on-death account, your beneficiary can access your funds after you die.
• Living trust: Bank accounts, including savings accounts, can be included in living trusts. You’ll need to name a trustee who will distribute your trust’s assets to your beneficiaries.

Closing a Bank Account After Someone Has Died

You must be a joint account holder, beneficiary, executor, or administrator if you intend to close the account of someone who has died. In some cases, you’ll need to provide the financial institution with a death certificate along with proof of your identity. You can also provide:

• A copy of the will
• Letters Testamentary
• Trust documents if assets were held in a trust
• A court order that gives you control over the assets
• Birth or marriage certificates that prove your relationships

The Bottom Line

The money in your savings account gets treated the same way as any other asset after you die. That’s why estate planning is so important, especially if you want your assets divided in certain ways among your loved ones. It also helps minimize the potential for conflict and disputes between family members, providing clarity so that your assets are transferred according to your wishes.