147: How to Legally Access a Loved One’s Bank Account After Death

Have you ever faced the frustrating challenge of accessing a loved one’s bank account after their passing? You’re not alone. In this episode of Absolute Trust Talk, Kirsten Howe and associates Ariana Flynn and Jessica Colbert break down the complexities of this process into simple, actionable steps. They explain why placing accounts in a trust is the ideal solution, debunk the dangers of DIY estate planning through joint accounts, and guide you through the specific legal requirements for accessing different types of accounts. Plus, they clarify the common misconception that a Power of Attorney can be used after death, highlighting why it’s not only ineffective but illegal. Whether you’re dealing with a trust-held account, joint account, POD account, or individually owned account, this episode provides the practical advice you need to navigate these tasks smoothly and avoid costly complications.

Time-stamped Show Notes:

0:00 Introduction

01:46 Best practices: Why placing accounts in a revocable trust is the ideal approach to avoid probate and save time and money

02:52 Understanding the key differences between wills and trusts, and what happens when there’s no planning (intestacy)

07:46 The dangers of DIY estate planning through joint accounts and how convenience can lead to family disputes

12:30 What NOT to do with a decedent’s accounts – Power of Attorney limitations and legal risks of unauthorized access

16:18 Understanding key roles after someone dies: Trustee, Executor, and Administrator

21:38 How to access different types of accounts: Transfer/Payable on Death (TOD/POD), trust-held accounts, and options for estates under $184,500

26:54 Strategic considerations before approaching the bank to prevent account freezes and manage automatic payments

Transcript:

Hello, and welcome to Absolute Trust Talk. I am Kirsten Howe. I’m the managing attorney at Absolute Trust Council, and I’m here with our two associates, Ariana Flynn and Jessica Colbert. We’re going to talk today about something that we have found is by far the most frequently searched topic that we have happening on any of our platforms – on our YouTube, on our website, wherever you want to look, wherever we track what people are interested in. This topic by far is the number one, and that is: what do you do? How do we handle a decedent’s bank account? So somebody in the family has passed away, they have a bank account, it’s in their name. What do we do? What are we supposed to do?

So there’s a lot to it, and we’re going to start first by talking about best practices so that you can be positioned, or your family can be positioned, so they’re not going to have some of the struggles that we’re going to talk about.

The best practice is going to be – because we’re estate planners, we like to plan ahead, we like to have everything under control, we like to know what’s happening – the best practice is going to be to hold all of your accounts in a revocable trust. Jessica, you want to talk about some of the pluses, the reasons why we advocate so aggressively, assertively, I’ll put it that way? We advocate in favor of using trusts.

Yes, if you’ve ever listened to us before, you’ve definitely heard us say a hundred times, more than that, have a trust. Put your assets in your trust. And the reason for that, the big reason for that, is because it avoids probate upon the death of the decedent. If there are assets left outside of the trust, it may trigger a probate if it’s over a certain threshold. And what a probate is, is it’s a process that’s supervised by the court that determines how assets are distributed upon the death of a person. And it’s time consuming. In California, it usually takes over a year, longer sometimes. And it can be expensive for the family because there are built-in statutory fees. It ends up costing the family quite a bit of money. So when possible, we want to avoid probate, and a trust allows you to do that. Additionally, a trust also allows you to direct where you want your assets to go. And so that’s another big selling point of a trust.

And just to be really clear, we’re talking about a trust. A will – some people don’t have a trust, but they have a will. And the will tells us what happens to all my stuff when I die, but a will is not a trust. What does a will do for us in terms of probate?

A will doesn’t avoid probate. Even if there’s a will, you still have to go to court. You still have to go through probate. It does have the benefit, like you said, of directing where your property will go. And so the court will follow what the will says, but it doesn’t avoid the court process itself.

OK. So Ariana, let’s talk about the situation where there is no will, there is no trust. What is going to happen in that situation and, with respect to this, we’ll focus on this fictitious bank account that we’re so concerned about.

Yeah, so if there is no will and no trust, it’s something called intestacy. And the California Probate Code has intestacy law of where your assets will go according to the law that it says, a certain order of heirs or individuals from your family. That’s where your stuff will go. But in order to even access the accounts and funds, you still do have to go through probate. So a relative or a close family member will have to petition the court to kind of gain access as administrator to then access the accounts and the funds of the estate. But it will, you know, you have no choice over intestacy laws at that point. It’s kind of written in the law, and you have to follow it.

Yeah, so that’s an important point to kind of highlight – that doing estate planning both allows you to make choices about what you want (you aren’t stuck with the laws of intestacy) and it also allows you to avoid that whole process. So there’s the “who gets it,” and then there’s the “what is the procedure or hassle that person’s gonna have to go through.” There’s two different things, both of which are easily controlled by doing planning with a trust.

I just gotta – I don’t, you know, we can’t say it enough. People literally can’t believe it. So one, Ariana, one of the problems with intestacy, just not worrying about probate, but intestacy, the laws might not say what you would say. They might make choices that you wouldn’t make.

Right, absolutely. So the law does take into account, you know, separate property and community property. So if you are married, it’s a presumption that all community property goes to the surviving spouse. And then, depending on if you have children or not, it will distribute the separate property according to those laws. And sometimes a client, you know, or an individual does not want that to happen, or they want to give more money to one child over another, or give money to siblings that would not be accounted for, stepchildren, that would not be accounted for in the intestacy laws.

Yeah, and I think a lot of people don’t realize that just because you’re married doesn’t mean your spouse is going to inherit everything. If you, especially if you marry later in life, you have separate property and you die intestate. Your separate property is not going to your spouse if you have children. Some of it will, but some of it won’t. It’s going to go to your children unless you have a written estate plan.

And the other thing that we encounter a bit is people who have a later in life relationship, but they’re not married. And they think of each other as spouses, but unless they take care of each other in a written document, no laws of intestacy are gonna provide for that surviving partner. There is no law in California that would allow that person to get anything. So these are very common issues that people need to pay attention to and not die intestate. That’s a terrible mistake.

Okay, so there’s also sort of do-it-yourself kind of estate planning. We see a lot of do-it-yourself estate planning, and one of the examples, one of the ways that people do estate planning themselves, is they create joint ownership of certain assets, joint tenancy, joint accounts. So they may add a child onto their bank account or onto an investment account.

Jessica, do you want to talk about what we are always kind of preaching when it comes to those kinds of do-it-yourself estate plans?

Yes, so we see it all the time where a parent may have added a child onto a bank account in joint tenancy. Oftentimes it’s done, you know, for convenience so that that child can have access to the account and help out their parent during lifetime. But upon death, an account that’s held in joint tenancy goes 100% to the surviving joint tenant. So in this case, if the parent whose account it really was dies, then that child then owns 100% of that account. And that’s just automatic, just by the way it’s titled. And that may not have been what was wanted by either party.

And it can lead to issues amongst other children. Perhaps it in effect may disinherit other children that they had by leaving 100% to this one child that was on the account at the time. And that may not have been what was wanted, and it can lead to disputes.

And then it’s kind of like, maybe if there’s $5,000 in the account, yeah, that’s not such a big deal to the family. Or, but it could be, but I’ve had a case where it was $400,000, and you know, father created a joint account with one child and not the other. And, you know, that’s a lot of money. There’s no legal requirement that that surviving joint tenant shares, there’s just not.

It’s theirs, it’s theirs at that point.

And I don’t think that was done with knowledge, with understanding of what the down-the-road consequence is gonna be.

And does it count as their inheritance under another document, under a will or a trust either, am I right?

That’s right, that’s an excellent point. If the trust says equally to my two children, then the one child gets the account plus half of everything else.

Yeah, so these are things – that’s one example of a reason why we don’t really like joint tenancy. Go ahead, Jessica. I kind of interrupted you.

I jumped ahead to another reason that we don’t recommend necessarily the joint tenancy accounts, and that is creditor risks. So with an account that’s held in joint tenancy, if one of the joint tenants has debts or lawsuits, then that account could be at risk. So think about a case where maybe a mother puts her son on the account for convenience purposes, and that son ends up having creditors or lawsuits. Then that, you know, the mother’s account essentially could be at risk because of those son’s creditors.

Yeah, and we all are, you know, if you drive a car, you’re in a situation where you could someday end up having a lawsuit against you. You know, even those of us who consider ourselves good drivers, it happens. Those things happen. So that’s not a pretend thing. That’s a real thing to worry about, and we don’t like joint tenancy for that reason.

Yeah, it’s easy. It’s an easy way to allow your child to help you with paying bills, and it’s an easy way to pass the account on after you pass away. You don’t have to hire an attorney to do a will or a trust, but it definitely has its drawbacks.

Okay, before – so the general point of this episode was to talk about what do you do to access a decedent bank account after somebody dies. But first we got to talk about what not to do. Some of the no-nos. Ariana, you wanna talk about some examples of things that should not be done?

Yeah, absolutely. So I’m gonna give some examples of what not to do. And unfortunately, in my prior history of trust and estate litigation, I’ve actually seen all of the examples I’m about to give in different cases. So these are the things that you don’t wanna do.

If you were managing somebody’s assets, a parent’s assets, under a durable power of attorney while they’re still alive, that’s all good and well. But right when that parent passes away, the power of attorney is not in effect anymore. The power of attorney is something called a living document, so I explain it as a living document, meaning that when the person is still living, it’s an active document. But right on that person’s death, the power of attorney has no effect anymore. There’s no legal authority, there’s no legal effect. You cannot access any accounts or assets as the agent of the power of attorney. So that’s no longer valid. You don’t want to do that. You don’t want to act under their power of attorney when that person has passed away.

You no longer have the legal authority to do it, and doing it is against the law. It’s actually a law.

Yeah, absolutely. And if you do keep accessing the bank accounts and, you know, business as usual, “I’ve always been doing this,” it actually constitutes fraud, bank fraud. So you’re not allowed to act under a power of attorney that’s not valid anymore, that’s no longer valid, whether through the person’s death or if they execute, you know, even a new power of attorney appointing somebody else as well. So you definitely don’t want to do that.

With that, you also don’t want to use the decedent’s ATM card, bank card, checks, any type of payment that they used to do. You don’t want to just take over, “Oh, well, I’m the son. I get to just write this last check.” That’s not – you’re not allowed to do that. That is not legally enforceable and valid. So you can’t use the ATM cards, bank cards, checks, or any other method of payment, even you know online transactions either, Venmo or PayPal or those easier ones to get away with too.

Yeah, or moving money from one account to another account. Just because you know the password, you know how to access the account, you should not be doing that. That again, illegal. Once the person has died and they’re no longer giving you their consent, that’s done. Absolutely.

Yeah, that’s all online access. Since those are very easy, if you have a password, it’s very at your fingertips in there. So, yeah, that’s a good point to make – yeah, no online accounts, even if it’s between accounts. You just want to leave everything as it is and do it the legal way. So those are kind of some of the things you don’t want to do.

Very good. Very good. Because you’ll end up in court, whether it’s probate court or criminal court, you don’t want to be in either one of those situations.

Okay, so we’re going to get into what should be done, how to go about accessing this account. But before we do, let’s make sure we all are on the same page. Everybody knows who the potential actors are going to be. Jessica, you want to talk about the various people who have jobs after someone dies?

Yes, so a few different roles that will affect how an account is accessed after someone dies. There is first what we call a trustee, and that is the person who is named in the trust document to manage the trust accounts. So if someone made a trust, they appoint a trustee to manage their accounts after they die.

Now the next two are often times used kind of interchangeably. They both relate to the probate process. And the first is the executor. And this is in the case where there is a probate, but there is a will. In the will, the person who created the will would appoint an executor. And that’s going to be the person who’s going to manage their estate and go through the probate process.

But when we go through a probate when there’s not a will, that same person who’s managing the estate is just called the administrator. And they are appointed by the court without a will appointing someone, and they do the same role as the executor. They’re just called two different things in this case.

Right, okay. So now we have a bank account. We’re just gonna call it bank account. The bank account is in the decedent’s name, it’s not in the name of a trust, it’s not a joint account, it’s in the decedent’s name alone. What are we looking at? What are the things we have to first figure out before we take our next step? Ariana, you wanna get us started there?

Yeah, absolutely. So I guess first you want to see if there’s a – it’s called a TOD or POD. So TOD is a transfer on death. A POD is a payable on death. You want to see if there’s a TOD or POD beneficiary on the account first, because if there is, the beneficiary, whoever is named, can access the account. And it’s a simple process. They bring a death certificate and whatever form the bank needs you to fill out. You fill that out, and the payout can be made.

Again, this does not fall into the estate. So it doesn’t go into the estate of the decedent, it goes directly to the beneficiary, meaning, you know, it avoids any type of costs of the administration, you know, funeral expenses, et cetera. So it goes directly to the beneficiary, kind of avoids the whole, you know, if you have a trust sort of, you know, or a probate open, it avoids that process. It goes directly to them.

Right. In that way, it’s a little bit like a joint account. It just goes right to the person, no probate, no trust administration, all of that, what the will says, none of that matters. This is just an arrangement that was made with the bank.

Right, exactly.

Okay, and so, if there is no TOD, POD, no death beneficiary, then we’ve got a situation where maybe there has to be a probate. And Jessica, how do we figure that out?

We need to look at what the value of all of the assets that are not in a trust and don’t have beneficiary designations – those are that we call within the probate estate of the decedent. We need to figure out what the value of all of those assets are. If the total value is over $184,500, that means you are over the probate threshold and a probate is required.

It’s important to note that even if the one account that you’re trying to get access to in that moment, maybe it’s $15,000, that’s under the threshold. That in itself doesn’t matter when you have to take into account all of the assets in the decedent’s probate estate. So even if the one account you’re wanting to get access to is $15,000, you’ll still have to go through the probate to get access to it if there are other accounts or there are vehicles. It could be, you know, there could be lots of different things that add up to the hundred eighty-four thousand five hundred. But if it’s not in a trust and it doesn’t have a beneficiary on it, then it goes in that stack, and we have to add that up. And when it’s over $184,500, we’re going to do a probate.

Yeah. And if there is a will, the executor is the person who will file a petition, open that probate. If there is not a will, then the administrator will do that, and the court will confirm that person as the administrator. And you aren’t going to be able to access this account until the probate is opened and the court approves your petition and signs off saying yes, you are the executor, you are the administrator, you can now go manage these assets. You won’t be able to do it until the court has signed off on it.

Right. Right. Okay, so if there’s no death beneficiary on this account, but the assets, the total of all the assets that we’ve been talking about, is less than $184,500, Ariana, we’re not gonna have to do a probate. There’s another approach that we can take.

Yeah, absolutely. So in that case, we can use something, a cool tool, as a small estate affidavit. So yeah, less than that probate threshold – ’cause you know, there’s changes every year too. So if it’s less than that probate threshold, we can utilize the smallest state affidavit. And that’s a document that you present, can be prepared through an attorney’s office. Sometimes institutions will have their own as well, kind of like the DMV too. There’s a way for cars to be transferred that way.

So it’s something called a smallest state affidavit. And you present that to the institution with a copy of the will. So if there is a will, all of the beneficiaries will need to sign. If there’s no will, then the intestate beneficiaries will need to sign it. With the smallest state affidavit, you have to wait, you know, 40 days after the date of death of the decedent for you to submit that and apply for that.

Yeah, and we create, we write a lot of small state affidavits. We do it with surprising frequency with which we discover accounts here and there that need to be accessed by using a small state affidavit. So we do a lot.

What you’re saying, the person who signs or the people who signed the affidavit, what you’re saying is this person died, I am the one who’s now entitled to this account. And there’s no need for a probate. You’re saying all of this under penalty of perjury. And so that’s why it’s important to know what all of the assets are and make sure that you’re under that threshold.

And as Ariana pointed out, it might be that multiple people have to sign it because, you know, if the will says everything equally to my three children, all three children have to sign the affidavit in order for that to be accessed.

But a lot of times when we are working with clients, there’s a trust involved. So the will is what we would call a pour-over will. Jessica, you want to talk about what that small estate affidavit is going to look like in that case?

Yeah. So a pour-over will, what that says is anything that is in my probate estate will pour over to my trust. So it’s kind of a catch-all. If you don’t title something in your trust, you will make sure that it will eventually be transferred into your trust and be administered the way you wanted it to according to the trust.

So in the case where we have a pour-over will, it says that it will go, the property will go to the trustee of my trust. And then the small state affidavit will say, because the trustee of the trust is the beneficiary under the pour-over will, that the trustee is the one who has to sign it. They’ll say, I am entitled to this property. They take control of it as trustee of the trust and then can administer it according to the terms of the trust.

Right, all right. Okay, so that’s how you do it. It depends on what documentation you have. It depends on how large the decedent’s probate estate is. It depends on who exactly is entitled to receive that account – the various methods that you’re going to be able to use. You know, ideally, you can get by with a small estate affidavit. That’s the simplest, easiest thing. It’s just that you have to wait 40 days. That’s kind of the only downside there.

What I think we need to talk about, lastly, is how to do all of this and when to do all of this. You know, it’s important to, I think, when possible, to figure all this stuff out before you go to the bank, before you walk in with your mom’s death certificate and say, “I know my mom has a checking account here.” It’s important to figure all of the backstory out and know what the plan is before you actually do that. Because once the bank discovers that someone has died, they’re going to freeze the account. So they’re just going to shut them down. And that means nothing’s going to happen.

And that account might have some automatic deposits being made into it. It might have, even more importantly, sometimes automatic payments being made out of it. A lot of people have their mortgage payments just made automatically out of their bank account every month, so they don’t have to worry about it. They know they’re not going to miss a payment. If the bank shuts the account down, that’s not going to happen. You’re going to miss a payment.

So you need to get, to the extent you can – it’s not always possible, but get as good information as you can before you proceed, because you definitely don’t want an important payment to be shut off. So come up with an alternative plan. Notify the mortgage – you know, “we’re not doing this anymore. I’m gonna be sending you a check, send me the bill” or whatever you need to do. But those kinds of things, I think, are important to keep in mind.

Okay, I think that’s really the bottom line. We told you how to do it, but really important to take a breath and figure it out before you move forward and do something that could really just be a headache and a nightmare.

You can close, I would say, one thing that people should pay attention to is as soon as someone has died, start closing things down. They don’t need their Comcast account anymore. They don’t need their cell phone bill anymore. Just start shutting those kinds of things down so then you don’t have those automatic withdrawals out of this account happening. We’ve seen situations where those kinds of automatic bills go on for five, six months before anybody does anything about it, and that’s just money out the door. You know, you didn’t benefit from having that Comcast account.

Okay, enough of my soapbox, enough of my lecturing. Anything else either one of you wants to throw into this conversation?

Yeah, I guess just one thing on that that last final note too. Sometimes I’ve seen it where clients, you know, there is a very, very important payment that they’re like, “I got to make this now, it cannot wait, you know, 40 days.” And so they do end up making it from their own account, and that’s, you know, reimbursable. That can be reimbursed back from the estate. It’s an extra step process there if a probate or trust is open, but that is, you know, reimbursable from the estate.

Right, right. That’s really an accounting issue. If that’s the only thing you can do, yeah, do it, and we’ll sort it out, you know, on the back end. It’ll be fine. It’ll be much better to do it than to miss a mortgage payment or miss a homeowner’s insurance payment. That’s probably even more lethal these days.

The last thing that I wanted to say is we’ve been talking about bank accounts. We’ve been talking about, you know, a mom’s checking account. This conversation would apply to lots of different kinds of assets. It applies to checking, savings, CDs, investment accounts, retirement accounts, life insurance proceeds, anything where there’s just the decedent’s name is on it and there’s no beneficiary, and we’re trying to figure out how to access it.

We focus on bank accounts because that seems to be a very common concern that our clients have, and you know, they have a lot of trouble with it. And I’m not going to say it’s because banks are evil, but banks have their process, and banks have to do what banks have to do. So the more knowledge you have going into it, the better result you’re going to have.

So as always, it doesn’t hurt to talk to an attorney. At least talk to somebody, get an hour of their advice before you march in and start doing stuff.

Okay, thank you Ariana. Thank you, Jessica. This was fun. I hope you had fun, and I hope you at home listening learned a lot.

Oh, and I’m supposed to remind you we actually have a resource guide at Absolute Trust Council. And there’s gonna be a link in the stream here where you can access it. You can always access it on our website, AbsoluteTrustCouncil.com. But it’s written just about all these issues that we’ve talked about today. And you can actually have a document to remind you of these things. So you don’t have to keep watching this episode over and over. (laughing) But we would love if you watched it over and over again.

OK, thank you all for listening, and we look forward to connecting with you next time.

Resources Related to This Episode:

• Absolute Trust Talk Episode 131: Drafting a Comprehensive Power of Attorney: What You Don’t Know CAN Hurt You https://absolutetrustcounsel.com/131-drafting-a-comprehensive-power-of-attorney-what-you-dont-know-can-hurt-you/
• Absolute Trust Talk Episode 069: What We Can (and Can’t) Do With Bank Accounts After Death https://absolutetrustcounsel.com/069-what-we-can-and-cant-do-with-bank-accounts-after-death/
• A Will is Not Enough – Securing Your Legacy with Estate Planning Life can change in an instant. A will is not enough to be prepared. Get free access to our actionable E-book Guidebook #1 and start protecting your legacy today. https://absolutetrustcounsel.com/guidebooks/
• Learn how to comfortably define gray areas and assess your own unique needs to effortlessly build a secure future now. Check out Guidebook #2, Estate Planning Beyond the Basics, here > https://absolutetrustcounsel.com/guidebooks/
• Get our free introductory guide to the most used estate planning tool, family trusts, and understand how we plan to help protect your family. Guidebook #3: https://absolutetrustcounsel.com/guidebooks/
• Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, and a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
• We’re pleased to provide a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
• ​ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.

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