Losing a loved one is overwhelming, and dealing with their financial affairs can make the process even more complicated. If someone dies without a will, the fate of their bank accounts, along with other assets, could be determined by California’s intestate succession laws if there are no joint owners or designated beneficiaries. Without the guidance of a carefully crafted estate plan, the probate process can become time-consuming, costly, and contentious. Worse yet, it can eat into the inheritance you want to leave behind. Professional assistance can be invaluable in helping you navigate the intricacies of estate planning, court accounting, and distributions to ensure the estate is handled with care and according to the decedent’s true intentions.
This expert guidance is crucial when trying to ascertain what happens to a bank account when someone dies without a will in California. Without such expertise, you may face unnecessary stress and confusion as you try to sort out the distribution of assets, including those in bank accounts. Here’s what you need to know.
What Happens to a Bank Account When Someone Dies Without a Will in California?
Typically, if a bank account is jointly owned or has a beneficiary designation, it can bypass the probate process without a will. In other words, if a bank account is jointly owned or has a designated beneficiary, a will is often unnecessary.
This is because the joint owner automatically assumes full ownership of the account and its assets, whereas a designated beneficiary could claim its contents directly from the bank. A bank account can also bypass probate if it is being absorbed by a trust.
Alternatively, if the decedent dies without a will and their bank account is not jointly owned, does not have a beneficiary designation, and is not being absorbed their trust, it will become part of their intestate estate.
As a result, the account will pass through probate and the estate administrator will have to distribute whatever funds remain in the account after probate according to intestate succession laws, also known as “next of kin laws.”
“This is something I see all the time, and the consequences can be far-reaching,” said Marcia L. Campbell, CPA, professional executor, and court accountant with decades of experience. “Imagine having a sibling you’re not on speaking terms with, a spouse you’ve separated from but never legally divorced, or a child with substance abuse issues you can’t trust with your hard-earned money. Without a will or a clear plan in place, those very individuals could end up inheriting your assets — whether you want them to or not. This is why having a solid estate plan isn’t just important; it’s absolutely essential to protect your legacy,” she warned.
Clearly, understanding what happens to a bank account when someone dies without a will is complicated and depends on several factors. Here’s what you need to know.
Related Article: What is Intestate Succession in California?
Are Bank Accounts Part of an Estate?
Yes, bank accounts are part of a decedent’s estate, which could include checking accounts, savings accounts, money market accounts, and certificates of deposit.
Are Bank Accounts Included in a Will?
Bank accounts can be included in a will, but there are exceptions. Bank accounts that the decedent jointly owned with someone else or that list a beneficiary can often bypass probate and usually don’t need to be included in your will.
When writing your will, consider providing a description of each account so there’s no question about which accounts you’re referring to. Also, because account information can change over time, review it regularly and keep it current.
Do Bank Accounts Have Beneficiaries?
Many bank accounts can have beneficiaries, but having a beneficiary on your account is often not a requirement. Putting a beneficiary on an account can help you ensure that the person you want to receive account funds after you die receives them.
While naming a beneficiary for a checking or traditional savings account isn’t common, it can help you pass down assets after death. Some institutions allow checking accounts to be converted into “payable-on-death (POD)” accounts.
POD accounts pass on all the decedent’s assets directly to the named beneficiary. POD accounts are not subject to probate, and beneficiaries can usually claim the proceeds by going to the bank with an ID and a copy of the decedents’ death certificate.
Can You Put a Beneficiary on Your Bank Account?
Yes, you can put a beneficiary on your bank account. The process for doing so is generally straightforward. You can choose and name the beneficiary with an online or paper form you mail in. You can usually select one or multiple beneficiaries.
If you name multiple beneficiaries, the amounts will be shared equally among them. In some situations, however, you might be able to indicate the percentage of distribution. In some situations, you might need to name primary and contingent beneficiaries.
Contingent beneficiaries only receive funds if the primary beneficiaries have died. When designating beneficiaries, you will need information, such as their:
- Full name
- Social Security number
- Date of birth
- Phone number
- Street address
- Relationship to you
You can add, remove, or change a beneficiary at any time using the same process. Ultimately, this process depends on the financial institution you bank with, and contacting them to gain an understanding of this process is the best approach.
Related Article: Complete Guide to the Final Distribution of Estate Assets
How to Find Out if You Are a Beneficiary of a Bank Account?
There are several steps to take to determine if you are the beneficiary of a decedent’s bank account. Here is how to find out if you are a beneficiary of a bank account:
- Get a certified copy of the death certificate and your government-issued ID.
- Go to the bank where the decedent had a bank account.
- Present the death certificate and your ID.
- If you are a beneficiary, the bank will release assets to you.
What Happens to a Bank Account When Someone Dies Without a Beneficiary?
When there is no beneficiary on a bank account, the first thing to do is determine whether the decedent shared ownership of the account with someone else. As we mentioned, if there is a joint owner, they will gain full ownership of the account.
If there is no joint owner of the account and the decedent did not leave behind a trust to absorb it, the account could be subject to probate. In some situations, it’s possible to settle the estate without formal probate – but not all estates are eligible for this.
Settling estates without formal probate is usually reserved for small, simple estates or to complete transfers of property from the deceased to the surviving spouse. A probate attorney can help you determine if the estate is eligible for an expedited procedure.
Related Article: What is the Final Accounting of an Estate?
What Happens to a Bank Account When Someone Dies Without a Beneficiary or Will?
If a bank account has no designated beneficiary or joint owner, or if the decedent did not leave behind a will with guidance for distributing the account and its assets, then the bank account will enter intestate succession.
My Husband Died, and I Am Not on His Bank Account. What Should I Do?
This is a common dilemma that people find themselves in when a spouse dies. Whether it’s your husband or wife, if they did not have you on their bank account, the account will likely go through probate unless it is jointly owned or has a named beneficiary.
If they left behind a will, this will govern how the bank account and its assets are distributed. If there is no will, then the account will enter intestate. As the surviving spouse, you will take priority and likely inherit the account automatically.
Further, if you have surviving children, they will also inherit a portion of the assets if they enter intestate.
How to Claim Deceased Bank Accounts Without Probate
In some cases, joint account holders, payable-on-death designations, or transfer-on-death designations can override and bypass the probate process. Here’s how to claim deceased bank accounts without probate in these situations:
- Contact the bank.
- Gather required documents (i.e., proof of identity, a certified copy of the death certificate, and documentation about the account and its owner, including their full legal name, Social Security number, and the bank account number.)
- Submit the claim and fill out any forms.
- Receive the funds.
However, if there are no beneficiary designations and there are no joint owners, the bank accounts must pass through probate first.
Related Article: Is Probate Needed if There is a Will?
Who Can Withdraw Money from a Deceased Person’s Account?
Even after they pass away, only an account owner can legally access bank account funds. If you want to withdraw money and close a bank account, you need special permission to do so, and a court must grant you the power to withdraw money.
For example, this may mean formally designating you as the executor, trustee, or estate administrator. However, keep in mind that if you are a joint account owner, then you can continue to use the bank and access the funds.
Related Article: Estate Administrator vs. Executor: What’s the Difference?
Can You Use a Deceased Person’s Bank Account to Pay Their Bills?
Yes, you can use a deceased person’s bank account to pay their bills, but you can only do this if you are an executor, trustee, or estate administrator.
In fact, when you hold one of these roles, one of your key responsibilities will be to pay the decedent’s outstanding bills, debts, and taxes using estate funds, which could include funds held in the decedent’s bank accounts.
You should pay all of these expenses with estate funds or assets before you distribute them to beneficiaries. In some situations, the executor, trustee, or administrator may even transfer funds from the decedent’s account to the estate account.
“Without a will, your assets could be tied up in probate and end up with those you never intended,” explained Marcia. “A well-crafted estate plan and guidance at every stage of the process ensures your wishes are honored, and legacy is protected,” she added.
Related Article: How to Find an Executor for My Will in California
Now You Know What Happens to a Bank Account When Someone Dies Without a Will. Don’t Leave Your Legacy to Chance.
Ultimately, the answer depends on whether or not the decedent planned for this in a trust and whether or not the bank account had a joint owner or designated beneficiaries. If it has neither, what happens to a bank account when someone dies without a will is similar to any other asset – it goes through the probate process and will be subject to intestate succession laws.
Whether you are creating an airtight estate plan and need expert guidance establishing it and electing a trustworthy executor or administrator or you need help navigating the complexities of probate that make your inheritance feel like it is in limbo, it is imperative to always work with a professional.
