Steps That you Can Take on your Bank Account Before and After Death

 

 

Death is always around the corner, and we’ll never know when it will take us. There are certainties when death visits you when you least expect it, and in times like this, you’ll leave many things on earth. Your friends, families, dreams, and even your money. This old saying goes, “you can’t take your hard-earned money when you die,” and it leaves the question, “what will happen to your bank account after death?”

Minutes to Read: 8 minutes

Age Bracket: 21 – 40 years

 

 

Maybe you’re bugged by the question mentioned and wonder. Well, the answer will depend on a lot of factors. What type of account does the deceased have? Does he have a will or beneficiaries mentioned? Many things should be discussed regarding what will happen to the account, and if you’re looking for an answer, here are the things you should know about.

 

 

 

How should I set up my account before I die?

 

Before worrying about what can happen to the finances when someone dies, you should be concerned about yours first. Ask yourself, “what will happen to my bank account when I die?” Instead of going directly to the answer you’re looking for, you must first know what to do to avoid circumstances to your account when you unexpectedly die. Preparing before you die is a must, and passing without further preparation can cause a heavy burden to your family that you will leave behind.

 

To avoid an absurd amount of paperwork for your family, you should set up your account on who will benefit from the amount you saved in case you die. In this way, you’ll let your family grieve over you instead of being all stressed up about dealing with the finances that you have left. Here are some things that you should do to set up your account.

 

1.     Make a last will

 

Having a will is not common in the Philippines and just usually happens for rich people with a lot of properties that can be inherited. Nonetheless, making a will make it much easier for your family, who’ll inherit your finances so they won’t be left with nothing when you pass. Making a will can ensure that your wishes will be followed once you die. You can state on your will who’ll get your specific finances, how much they can get, and when they can receive it. This may not necessarily avoid probate, but at least your family has a guideline on your assets’ inheritance. This way, quarrels between families can be avoided.

 

2.    Share your account

 

Sharing your account or adding account holders to your account can be convenient for everyone when the time has come. You can make your spouse or child the joint owner of your account. Once you share your account with them, this will save everyone the hassle of processing all documents just to access your account since having a joint account holder gives them the right to legally inherit and access your finances once you die. However, they can access and withdraw your funds whenever they like without your consent. That is why only share your bank account details with your trusted family.

 

3.    Beneficiaries

 

Including beneficiaries or Payable-on-Death (POD) / Transfer-on-Death (TOD) on your account make it easier for your family to access your finances once you pass and will not give them the ability to access them until you’re alive. You can still change your beneficiaries whenever you want, and it won’t cost you hefty fees for lawyers or any process. Once the time has come, your POD beneficiaries will only have to provide their Valid government-issued ID and a copy of your death certificate to inherit your finances.

 

 

How do banks know the account holder died?

 

Once you die, the first one who’ll usually know about it is your family. May it be your spouse or child, if you have one. Next will be your parents, then your relatives. The point is, not everyone will know about your death unless your relatives inform your closest friends. Together with this, do you wonder how banks know when you die? Let’s jump right into the answer.

 

1.     Account goes dormant

 

The bank will never know an account holder has died unless they are informed. However, if the bank account is unused for an extended period, that bank will start to close the bank account just in case. If no one has reached out to them to gain inheritance or access, the funds in the account will go directly to the government fund.

 

2.    Through a Family Member

 

It is the family member’s responsibility to inform the bank about the account holder’s death. If you’re a family member and have no idea to inform the bank about your relative’s death, here are some ways to notify them.

 

1. Contact the Bank

Call or visit the bank where your relative has an account and tell them about the situation. Once they are informed of the situation, they will provide the steps and documentation needed for the process.

 

2. Obtain necessary documents

A copy of the death certificate is the most important since it will be the proof of death of the account holder. Asking for a copy of the death certificate will be easy through Philippine Statistics Authority (PSA). Other than this, documents from the court, social security numbers, or more are needed for the bank to close the account.

 

 

 

What happens to a bank account when the account holder dies?

 

When an account holder dies, the process will depend on the situation. It may be an easy process or complicated. Cases like this usually cause a feud between families, especially if there is a huge amount to inherit inside the account. Here are some possible cases that may happen if the time has come.

 

1.     Account will be freezed

 

Once the bank has been notified about the death, the account will be automatically frozen to avoid unnecessary withdrawals or any sort of transaction from the account. Bank account includes savings, credits, and checking accounts. The account will remain frozen until further notice or authorization from the probate court or requirements are provided by the family.

 

2.    The account was set up before the death.

 

If the account holder has set up the account before their time of death, such as the last will is provided, another account holder has been added, or beneficiaries have been processed, the necessary process will be done to claim the finances they’re entitled to. You can read more information on How to set up my account before I die?

 

3.    Nothing has been set up.

 

Passing without setting up the account complicates the process for the family who wants to claim the finances. In cases like this, families that are close to the account holder should know about the situation. The account will undergo probate, which can be complicated and lengthy. First, the assets owned by the deceased are handled by the estate, which uses the fund to assign an executor or an administrator to handle the case. Once the probate process has started, any debts owed by the deceased will be paid first before managing the distribution of the money. According to our law, the spouse or their children is entitled to receive the money. However, in cases where the account holder has no survivors or families that are entitled to receive the money he owns, in most cases, the fund will go to the state.

 

After any sort of process is done to the account and the transfer of funds is already executed, the account will be officially and completely closed. The closest relative will receive a letter confirming the process is already done. Ensure all the accounts, including the savings, checking, investment, and loan accounts, are closed. However, if the deceased has an open line of credit card, you have to pay off all of its outstanding balance, if there are any, before closing the account.

 

 

 

How should the family handle the money?

 

Discussing financial matters with the family can be a bit complicated, but it should be done correctly to avoid arguments. The families’ responsibilities regarding a dead loved one do not end with the burial, but it continues handling the money and properties the deceased has left.

 

Other than the processes I have mentioned above, families can process the distribution of assets by themselves, as a whole, and with the consent of each member. Things like this should be dealt with urgently to prevent possible penalties. To make the process simple for everyone, here are some steps you can take to handle the assets of your loved one.

 

1.     Death Certificate

 

Obtaining a copy of the birth certificate is the most essential document when processing the financial matters of someone already dead. It is best to have several copies for convenience in case different institutions ask for an original document copy.

 

2.    Family Meeting

 

This part can be the most challenging since things may have to be sorted out other than the finances, such as arguments or any kind of conflict in the family. Nonetheless, a family meeting must be communicated to everyone regarding the distribution of the finances and other information and matters pertaining to the situation you’re handling.

 

3.    Gather all the finances left

 

Go through the deceased finances and properties. Knowing what the deceased has left is essential to know what to take care of and what processes must be taken care of. Assets include cash, equities, bonds, shares in a business, insurance, money market placement, paintings, real estate, and other valuable properties. At the same time, liabilities include amortization, personal debt, credit card dues, and more.

 

4.    Gather all the documents for the properties

 

Any document or record that indicates the deceased’s rights, claim, title, or interest, such as passbooks, real estate titles, bank certificates, car registration of a vehicle, declaration of trust, contract to sell, pension plans, insurance policies, and others. The price of stocks at the time of death will be the basis for the share of stocks, while the zonal valuation of the property will be the basis for real estate. Knowing the value of these assets is a must for liquidation and distributing the funds.

 

5.    Claim the insurance benefit and pension payments.

 

Check if the deceased has an insurance policy so you can file an insurance claim and claim the insurance benefit you’re entitled to if you’re one of the deceased’s beneficiaries. You can check the details on how you can claim on the insurance company’s website. The usual required documents are personal documents and a death certificate which you already have. Meanwhile, if the deceased also have a pension, you can check if the beneficiaries can claim the pension payments and submit the needed documents. Usually, the beneficiaries are the spouse and the minor children. Ensure to read and understand the pension terms.

 

6.    Access the accounts

 

Our previous discussion mentioned that once the bank is informed regarding the account holder’s death, the bank will freeze all of the accounts with them, and no one can access them. You can submit all the required documents and tax clearances to gain access to all the accounts the deceased has to gather all the funds he had left.

 

7.    Pay all of the debt

 

Once you already have all the funds, check all the debts the deceased may have left behind. Check all the records for clues if he has one and ask his friends and relatives for his personal debts. Once you already have a list of all the debt he has left, you can settle all this using the fund you claimed.

 

8.    Distribute the funds to the family

 

Since you’ve already settled everything you have to settle, the remaining funds will be divided among the family members. If the deceased did not leave a will, the family members have to communicate and agree to a certain amount, and the process of distributing the funds, depending on what they see is equitable.

 

9.    Consult a professional

 

If there are properties such as large estates that you can’t easily take care of, it’s best to consult a professional such as an accountant or lawyer. Some processes can be considered in settling this case, and taking this matter to court is quite common. Once the legal heir is agreed, the property title will be transferred to their name.

 

 

Final Thoughts

 

We can see that settling the distribution of the possible inheritance can take a lot of work. Other than worrying about the burial and grieving over the loss of a loved one, there is still a lot of paperwork and considerable circumstances waiting for them if you do not decide to set up your account before you leave.

 

There’s no way to prepare for death other than settling everything and deciding which step you’ll take to let your dependents or beneficiaries claim what you left for them. This is a crucial step to let your family, whom you will be leaving, have a convenient life once you leave them.

 

 

MUST-READ AND SHARE!

2023 Your Practical Wedding Guide

Your Ultimate Access to Kuwait Directories in this COVID-19 Crisis

Investments and Finance Ultimate Guide

OFW FINANCE – Money News Update that you need to read (Table of Contents)

A Devotional for having a Grateful Heart

Stock Investment A Beginner’s Guide

How To Save Money Amidst Inflation

Philippines Best Banks with High-Yield Savings Return

Savings Dos and Don’ts

Essentials Before Applying For a Credit Card

Pag-IBIG Fund Guide

SSS PESO Fund – A Guide

Credit Card Starter Guide for Beginners

 

If you like this article please share and love my page DIARYNIGRACIA PAGE Questions, suggestions send me at diarynigracia @ gmail (dot) com

You may also follow my Instagram account featuring microliterature #microlit. For more of my artworks, visit DIARYNIGRACIA INSTAGRAM