What happens to your money when you die?

When a loved one passes away, managing what happens with their money might not be at the top of your list but it’s an important process that you will eventually need to go through. This guide will walk you through the steps you’ll need to take to deal with the money and accounts in your loved one’s name.

You'll discover more about:

• Bank accounts 
• Premium bonds
• Pensions

Before you go through the process of accessing and closing your loved one’s bank accounts, it’s important that you get a list of all their accounts. Did they have any additional budgeting accounts open or an ISA open with a bank different to their current account?

Wondering how to find the bank account of a deceased relative? It can be difficult to trace your loved one’s accounts, especially if they passed away intestate (without a will). Banks are supposed to write to you if an account has been inactive for an extended period of time, but this can be up to three years for savings accounts so it’s best to get things sorted sooner. My Lost Account can help you trace your loved one’s accounts if you’re unsure about whether you’ve accessed them all.

What happens to your bank account when you die?

Below is a list of common questions asked regarding what happens to your bank account when you die, or when a loved one dies. It can be a confusing process if there are lots of accounts to deal with, so remember to seek help and advice should you need it. Family and close friends can also assist.

Who can access and close the deceased's bank account?

The executor named in the will can do this, or if no executor has been nominated, the administrator (main beneficiary). They’ll contact the bank in question with proof of death to begin the process. The Death Certificate is typically accepted as proof.

Closing a bank account after someone dies

These steps will explain how to close a bank account after someone dies:

1. Executor/administrator will be required to contact the bank with proof of death – also note the executor/administrator must prove they are who they say they are by taking the will (or evidence to prove the relationship with the deceased).
   
   
2. The bank will freeze the account.
   
   
3. The executor or administrator will need to ask for the funds to be released – the time it takes to do this will vary depending on the amount of money in the account.
   
   
4. Each bank will have their own guidelines for monetary amounts and release times. A typical amount for immediate release is between £15,000 and £50,000.
   
   
5. The bank will usually request to see a Grant of Probate before releasing any funds. This is because they are legally obligated to check if they are releasing money to the right person.
   
   
6. Once the bank is satisfied with the Grant of Probate, they will release the funds.

It’s important to note that you may be required to show a Grant of Probate even if the monetary amount in the account is small. This can be for several reasons, such as a complex will.

How long does it take to close the deceased's bank account?

The time it takes to close the deceased’s bank account will depend on the monetary amount that is held in there. In some cases, you might require funds to be released before you receive a Grant of Probate, perhaps to cover funeral expenses or Probate fees.

You may want to consider asking someone at the bank for help with this. They’ll be able to advise you on the best way to proceed.

What happens to joint bank accounts after death?

If someone dies and they were an account holder on a joint account – perhaps with their spouse or children, the next steps can be a little confusing.

Naturally, the surviving account holder may assume the money is released to them, or they may ask if the account can remain open in their name. There’s also the question of whether the money should be dealt with as part of the deceased’s estate and wishes in their will.

Most joint accounts come with rights of survivorship. This means the surviving account holder can take full ownership of the account by presenting the deceased’s Death Certificate to the bank. According to The Balance, “Joint accounts typically do not contribute to the decedent’s probate estate, which means that the terms of the account supersede the decedent’s will.”

There may be income tax, estate tax and inheritance tax implications when inheriting a joint account. It’s important to talk these through with someone from the bank to understand more.

What happens to premium bonds after death?

If your loved one held premium bonds before they died, the executor or main beneficiary can choose to either cash in the investment or request for it to remain as it is.

There are several things you’ll need to consider:

• If the bonds aren’t cashed in within the first year after death, they are still entered in the prize draws. If a prize is won, the executor or main beneficiary can claim it, but it must remain in the name of the deceased.
  
  
• The executor or main beneficiary should notify National Savings and Investments when the bondholder has passed away. This means prizes can be sent to the right person. Once NS&I are aware of the death, the 12-month holding period begins.

Also note that if the value of the bonds is more than £5,000 you’ll need to have a Grant of Probate issued before you can claim any prizes from the ballots. NS&I specifically state that there are no time scales for collecting winnings and go into further detail about the bonds process when somebody dies.

What happens to your pension when you die?

If you’re wondering “what happens to my pension when I die?”, then see below for information regarding state and private pensions.

If the deceased had a state pension you’ll need to contact the pension service they used so that they can stop any further payments.

The civil partner or spouse of the deceased might be entitled to payments from the individual’s state pension. This depends on:

• Amount of contribution to National Insurance they’ve made
  
  
• When you (and your civil partner or spouse) reached state pension age – if you haven’t, you might be eligible for bereavement benefits

GOV.UK have more information regarding state pensions in the event of a death.

For personal and workplace pensions

You should check to see if the deceased had a personal or workplace pension. If you’re unsure, contact the provider to find out more about the situation, including amount and next steps. If you don’t know the provider, you can contact the deceased’s employer to find out.

If you think the deceased had a pension but there’s no trace, GOV.UK has a Pension Tracing Service that you can enquire about. 

Further advice

Handling a loved one’s estate when they pass away can be challenging, especially if they didn’t leave a will or they opened multiple bank accounts. It can be confusing dealing with different types of debt too, which is why it’s important to speak with family and close friends if you need help.

Remember, trained staff at banks, solicitors and NS&I will be able to give you guidance should you need it.

Find out more about what to do when someone dies to help you manage everything you need to think about at an already difficult time.