What happens to your bank account when you die?

Death is an inevitable part of life, and it’s important to plan for what happens to your assets after you pass away. One of the most important assets to consider is your bank account. What happens to your bank account when you die? The answer is not as straightforward as you might think.

First, it’s important to understand that there are different types of bank accounts. The most common types are checking accounts, savings accounts, and certificates of deposit (CDs). Each type of account has its own rules and regulations when it comes to what happens to the account after the account holder passes away.

Checking Accounts

When it comes to checking accounts, the rules vary depending on whether the account is held solely in the name of the deceased or if it is a joint account. If the account is solely in the name of the deceased, the account will be frozen upon their death. This means that no one will be able to access the funds until the account goes through probate. Probate is the legal process of distributing a deceased person’s assets according to their will or, if there is no will, according to state law.

If the checking account is a joint account, the surviving account holder will have access to the funds in the account. However, it’s important to note that joint accounts can have their own complications when it comes to estate planning. For example, if the surviving account holder is not a spouse, they may be subject to gift taxes on the funds in the account.

Savings Accounts

Savings accounts are similar to checking accounts in that they can be held solely in the name of the deceased or as a joint account. If the savings account is solely in the name of the deceased, it will be frozen until it goes through probate. If it is a joint account, the surviving account holder will have access to the funds.

Certificates of Deposit (CDs)

CDs are a type of savings account that typically have a fixed term and interest rate. When it comes to CDs, the rules are similar to savings accounts. If the CD is solely in the name of the deceased, it will be frozen until it goes through probate. If it is a joint account, the surviving account holder will have access to the funds.

In all cases, it’s important to have a will or other estate planning documents in place to ensure that your assets are distributed according to your wishes. If you don’t have a will, your assets will be distributed according to state law, which may not align with your wishes.

In conclusion, what happens to your bank account when you die depends on the type of account and whether it is held solely in your name or as a joint account. It’s important to have a will or other estate planning documents in place to ensure that your assets are distributed according to your wishes.