One of the first practical questions families ask after a loved one passes away is this: What happens to their bank accounts?
It is a fair question. Bills still need to be paid. Funeral costs arise quickly. And emotions are already running high. Understanding how bank accounts are handled in Canada, particularly in British Columbia, can help reduce uncertainty during a difficult time.
The answer depends on how the account was set up.
Solely Owned Bank Accounts
If the bank account was in the deceased person’s name alone, the account is typically frozen once the bank is notified of the death.
This means no one can withdraw funds or make transactions until proper legal authority is provided. In most cases, the executor will need a grant of probate before the bank releases funds.
There are limited exceptions. Some banks may allow funeral expenses to be paid directly from the account upon presentation of invoices. However, access is otherwise restricted until probate is complete.
These funds form part of the estate and will eventually be distributed according to the will or intestacy laws if there is no will.
Joint Bank Accounts
Joint accounts are handled differently. In many cases, joint accounts in Canada are set up with a right of survivorship. This means that when one account holder dies, the surviving account holder automatically becomes the sole owner of the funds.
In these situations, the money usually passes outside the estate and does not require probate.
However, joint accounts can sometimes become a source of conflict. For example, if an elderly parent adds one child to an account late in life, other siblings may question whether the account was intended as a gift or merely for convenience. Disputes can arise over whether the funds truly belong to the surviving joint holder or to the estate.
These situations can lead to estate litigation if the parties cannot agree.
Accounts With Named Beneficiaries
Certain registered accounts, such as RRSPs or TFSAs, may have named beneficiaries. If a beneficiary is properly designated, the funds typically pass directly to that person without going through probate.
Life insurance policies also work this way.
Even so, there can be complications. In some cases, beneficiary designations are outdated or unclear. Disputes may arise if family members believe the designation does not reflect the deceased’s true intentions.
What If There Is No Will?
If someone dies without a will, their solely owned bank accounts still form part of the estate. However, instead of an executor, a family member must apply to become the estate administrator.
The bank will require proof of this legal authority before releasing funds.
Practical Steps for Families
If you are dealing with a loved one’s bank accounts, consider taking these steps:
- Notify the bank as soon as possible
- Obtain multiple certified copies of the death certificate
- Do not withdraw funds unless you have proper authority
- Keep detailed records of all communications
Acting without legal authority can create serious complications later.
When Bank Accounts Become Disputed
Unfortunately, disagreements over bank accounts are common in estate matters. Allegations of undue influence, questions about joint ownership, and unclear beneficiary designations can all lead to conflict.
If concerns arise, it is important to address them early. Legal advice can help clarify whether the funds belong to the estate or pass directly to another individual.
Final Thoughts
What happens to bank accounts after someone dies depends largely on ownership structure and beneficiary designations. Sole accounts are usually frozen pending probate. Joint accounts often pass to the survivor. Registered accounts may bypass the estate altogether.
Every situation is unique. Understanding the legal framework can provide peace of mind and help families avoid unnecessary disputes during an already difficult time.