By the BrightPurse Team | Personal Finance
When someone dies, their bank accounts don’t simply close, and they don’t automatically go to the next of kin. What happens depends almost entirely on how each account was set up, and most families find this out at the worst possible time.
That’s worth thinking about while things are calm. According to Caring.com’s 2025 wills study, only 24% of Americans have a will, down from 33% in 2022. The good news is that for bank accounts specifically, a will often isn’t what decides things anyway. The paperwork you signed when you opened the account usually matters more.
The Bank Freezes Sole Accounts When It Learns of the Death
Once a bank is notified of a death, typically through a death certificate or a government notice, it restricts any account that was in the deceased person’s name alone. Checks may stop clearing, and the debit card stops working. Automatic payments can bounce.
This is a protective step. The bank’s job at that point is to hold the money until it knows who has the legal right to it. Nobody can use the account until that’s sorted out, and that includes a spouse who isn’t on the account and an adult child who helped pay the bills.
Authority over the account changes too. A power of attorney ends at death, so an agent who managed the account while the person was alive can no longer act on it. The same is true for an authorized signer, who could write checks but never owned the money.
Joint Accounts Pass to the Survivor
Most joint checking and savings accounts are set up with “right of survivorship.” When one owner dies, the other owner becomes the sole owner of everything in the account. The money doesn’t go through probate, and the will doesn’t control it. The survivor usually just brings a death certificate to the bank so it can remove the deceased owner’s name.
This is the easiest arrangement for couples, and it’s why so many people have one. It also has a catch. If a parent adds an adult child as a joint owner purely for convenience, that child legally owns the balance at death, even if the parent’s will says the money should be split among several children. Nolo’s guide to bank accounts at death walks through this problem, and it causes real family fights. If you only want someone to help pay your bills, an authorized signer or a power of attorney is usually the cleaner tool.
Payable-on-Death Accounts Go Straight to the Beneficiary
A payable-on-death (POD) designation, sometimes called a “Totten trust” or an “in trust for” account, lets you name one or more beneficiaries who get the money when you die. While you’re alive, they have no access and no rights to it. You can change or remove them any time.
After the death, a beneficiary typically claims the money by giving the bank a certified death certificate and proof of identity. It skips probate, and it usually takes days or weeks rather than months. NerdWallet’s explainer on POD accounts has more on how banks handle the claim.
Like joint ownership, a POD designation overrides the will. If your will leaves “everything to my three children” but your savings account names only one child as POD beneficiary, that one child gets the savings. People forget to update these forms after a divorce, a death in the family, or a falling out, and the bank pays whoever is listed.
Accounts With No Co-Owner or Beneficiary Go to the Estate
If the account belonged to one person and had no POD beneficiary, it becomes part of that person’s estate. Someone then needs legal authority to collect it.
Usually that’s the executor named in the will, or a court-appointed administrator if there was no will. The court issues a document (often called letters testamentary or letters of administration) that the bank needs to see before it releases anything. The executor generally opens an estate account, moves the money there, pays the deceased person’s final bills and debts, and then distributes what’s left according to the will or state law.
Probate can take months, and sometimes longer. That’s why a simple POD form on a checking account can save a family a lot of time.
Small Estates Can Skip Most of Probate
Most states have a shortcut for smaller estates, usually a sworn form called a small estate affidavit. The limits vary a lot by state. In California, for deaths on or after April 1, 2025, heirs can use an affidavit to collect up to $208,850 in personal property, but only after at least 40 days have passed since the death. California adjusts that figure for inflation every three years, and the next change is set for April 2028.
Banks often accept these affidavits along with a death certificate. Check your state court’s website for the exact rules and forms, since thresholds and waiting periods differ.
Social Security Payments Can Be Pulled Back
This one surprises a lot of families. Social Security doesn’t pay benefits for the month a person dies. Because benefits are paid in arrears, the payment that arrives the following month (for example, the August payment for someone who died in July) has to be returned.
If the money came by direct deposit, the Social Security Administration’s guidance is to tell the bank as soon as possible and ask it to send back that payment and any later ones. The Treasury can also reclaim those deposits straight from the account. Survivors who spend that money may get a bill for it later. If a paper check arrives for the month of death or after, don’t cash it. Send it back.
Eligible family members, though, may qualify for survivors benefits, and a surviving spouse or child may be able to get a one-time $255 death payment. The SSA’s guide on what to do when someone dies covers both.
Deposit Insurance Has a Six-Month Grace Period
FDIC coverage depends on ownership categories, and a death can change those categories. A joint account owned by two people is insured up to $250,000 per owner, or $500,000 total. When one owner dies, the FDIC keeps the old coverage in place for six months, after which coverage generally drops to the survivor’s limit.
For most families this never matters. For a surviving spouse with a large balance in one joint account, that six-month window is a reminder to look at whether the money should be spread across accounts or banks.
What to Check Now, While It’s Easy
Log into your bank and look at how each account is titled. Is it individual or joint? Is there a POD beneficiary, and is it still the right person? Many banks let you add or update beneficiaries online in a few minutes, and naming more than one is usually allowed.
Make sure the people you’re leaving behind know which banks you use. Unclaimed accounts are more common than you’d think, and states end up holding the money until someone finds it.
None of this replaces a will or a conversation with an estate attorney, especially if you own property, have children from more than one relationship, or have a business. For your everyday checking and savings, though, the form you fill out at the bank decides more than most people realize.