Written by Fact checked
Whether you’ve recently been bereaved or are facing an uncertain future, we all know you can’t take money with you when you pass on, so what happens to a bank account when someone dies in Australia? Savvy looks at the formalities required to claim a bank account after death, and what documents are needed by banks when someone dies.
This will depend primarily on whether the account was jointly held or held in the name of one person only. If it was a joint account, it will continue to operate as normal after the death of one account holder, with the second account holder able to continue carrying out transactions as usual. All funds in the joint account will automatically transfer to the second account holder once the financial institution has been advised the first person is deceased. The account will not be frozen and will operate as normal.
However, if an account is in one name only, what happens to it after death will depend on whether the deceased person has left a will or not.
What happens to your bank account if you die leaving a will?
When a bank or financial institution is made aware their customer has died, the account will immediately be frozen to protect the funds until the rightful owner or beneficiary has been established. If the account holder has previously provided the bank with details of their beneficiary, that person can immediately claim the funds in the account once they prove their identity as the new legal owner of those funds.
If a person dies leaving a will and specifically mentions bank accounts and names the beneficiary of these accounts, the will’s executor can simply inform the bank of the account’s legal owner. The bank will release the account’s funds once the beneficiary has supplied documents to prove their identity.
What happens to your bank account if you die leaving no will?
If you die intestate (meaning ‘leaving no will’), your bank account will be frozen to protect the assets in the account. However, from there, things get a bit more complicated. If there isn’t any will, the Australian state in which the person lived will appoint an executor of the deceased person’s estate. It is the executor’s job to determine who the rightful beneficiaries are and to find those persons.
If a relative wishes to act as executor of a deceased person’s estate, they can apply to the Supreme Court in their state to be ‘granted representation’, which means they have the right to administer the estate. They will then be issued a ‘Letter of Administration’ which gives them the right to act as executor and determine who the legal beneficiaries of the estate are. Banks will need to see a copy of the Letter of Administration before agreeing to release the account funds.
What documents will a bank need to prove that a person is deceased?
A bank or financial institution will usually need to see a copy of the Death Certificate and you’ll need to complete a form called a ‘notice of the death of a customer’. To complete this form, you’ll need the deceased person’s full name, address, date of birth and account number details (if you have them). A bank will probably also need to see a copy of the will, Letter of Administration or proof of probate before releasing funds to an executor.
To simplify the process of informing people about a loved one’s death, you can contact the Australian Death Notification Service (ADNS). This is a national database supported by all states and territories in Australia which aims to simplify the death notification process. If you register the deceased person’s details with this online service, you can nominate which other organisations and government departments will be notified about your loved one’s death.
This means a court has granted the right to a person to act as executor of a deceased person’s will. If there is a will, the executor will be granted probate. If there’s no will, the person wishing to act as executor will be granted a Letter of Administration.
It is very common for people in Australia to open a bank account in their name, and then forget all about it or for people to pass on and their bank accounts to remain untouched for many years. In terms of how to find a lost bank account in your name, contact the Australian Securities and Investments Commission (ASIC), which is the government agency responsible for unclaimed money. ASIC estimates there’s about $1.5 billion of lost money waiting to be claimed in Australia from bank accounts, shares, investments and life insurance policies. If you want a new account, though, you can compare your options with Savvy today.
Yes – when someone dies, their bank accounts are frozen, but any debt they may have remains as an unpaid debt. Usually, the mortgage lender will claim the remainder of the home loan debt on the deceased person’s estate, meaning the home may have to be sold to pay off the mortgage (if the home loan was in their sole name and secured by the property). However, if the home loan was in joint names, it’s often possible for the surviving partner to take over the mortgage and continue paying for the home so they can remain living in it.
Once a bank receives a death notification it will immediately freeze the assets of the deceased person. This will happen that day or within hours of receiving the appropriate notification. The bank will then wait to hear from the executor of the person’s will or a lawyer or solicitor representing the deceased person before taking any further action. The financial institution will not release the funds in the frozen account until it is sure the legal beneficiaries of the estate have been properly identified.
In Australia, once a bank account has been inactive for seven years, it’s deemed a lost bank account. In this case, the funds are transferred to the Commonwealth of Australia Consolidated Revenue Fund. However, they can be reclaimed from ASIC at any time in the future if the rightful owner can prove the funds are theirs.
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