When a loved one dies, it’s time for those left behind to sort out their finances. A question that typically gets asked is: Will banks freeze accounts on death?
Banks typically freeze accounts when they are informed of a person’s death. Knowing what the process looks like can help families get ready for the elements of estate planning.
Managing an estate in New Mexico when someone dies can be complicated, and The Law Office of Anthony Griego get knows this. Once a loved one has passed, we are there to help you navigate everything from distribution of assets through probate to navigating the nuances of power of attorney capabilities.
Why Do Banks Lock Accounts When Someone Dies?
Banks generally freeze accounts when they’re informed of the account holder’s death to safeguard the estate. This ensures that the funds are distributed as per the deceased person’s will or state laws. It also halts any unauthorized transactions while the estate is undergoing the probate process or until valid legal proof is provided.
The account usually stays frozen until the executor or administrator of the estate shows legal authority to handle the money. However, if the account is a joint account, or if it has been established with a payable-on-death (POD) beneficiary, freezing may not occur. If this is the case, the funds could be transferred automatically to a co-owner or a designated beneficiary.
Can A Power of Attorney Use A Bank Account After Death?
Many people believe the executor or the person with a power of attorney, or POA, can still access your bank account after you die. But the power of attorney only becomes effective while the person who gave it is still alive. The POA’s legal authority ends when that individual dies.
After one passes, this power of attorney is revoked and the executor named in the will, or appointed by the court, takes over these financial responsibilities. Penalties: If you use the POA to try to access funds after the account holder has died, you may incur penalties.
Can a Power Of Attorney Close a Bank Account?
The short answer is no — a power of attorney cannot close a bank account after the account holder dies. After the account holder dies, the POA can no longer make the late person’s financial decisions.
The only person who can close bank accounts, pay debts and distribute assets as described in the will is the appointed executor or court-authorized administrator of the estate.
If you are power of attorney for someone, it’s important to understand your responsibilities and limitations both before and after the person’s death. In fact, acting outside of your authority can lead to a messy probate process and, in extreme cases, may lead to legal ramifications.
What Happens to Joint Accounts or Payable-on-Death (POD) Accounts?
In certain situations, a bank account may not be frozen. If the deceased had an account that they shared with someone else, the living co-owner generally has continued access to the funds.
Likewise, if an account names a POD beneficiary, the money passes directly to the beneficiary named on it without needing to go through probate. This process helps to streamline asset distribution and avails complications related to frozen accounts.
Steps to Access Bank Accounts Frozen After Death
If you are an executor, or a beneficiary of an estate, there are several complexities that can be involved in the bank account unfreezing process. Here’s a rough idea of what those steps are:
- Get a death certificate — The bank will require official evidence of death.
- Collect estate documentation — This entails the will as well as court-mandated executor documentation.
- Submit documentation to the bank — After the bank establishes your legal authority, the account should be released for proper distribution.
- Retain probate guidelines — Sometimes probate is essential, depending on the size of the estate. The bank might need to take further steps to be on the right side of the law.
Partner With The Law Office of Anthony Griego LLC For Estate Planning Guidance
Dealing with the bank accounts after the death of a loved one can be stressful, particularly if you are unsure of your rights and responsibilities as an heir.
The Law Office of Anthony Griego LLC recognizes that having proper estate planning in place is critical in reducing potential complications during such a difficult period.
Clearly establishing a plan can help your family avoid the potential complications of asset distribution. Reach out today to get compassionate legal guidance to give you peace of mind.
