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No matter what your living situation is like, there are a few things that can get complicated in the event of your death, particularly when it comes to your finances. For instance, the management of your estate will become particularly important, as it’s used to distribute your inheritance and, if necessary, cover your unpaid debts.
There are also a number of ways that the money in your bank accounts might be dealt with. Keep reading if you’d like to know what happens to your bank accounts when you die, so you can better prepare yourself and your loved ones.
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When you die as the sole owner, the first thing your bank or credit union will do is shut down your account. Afterward, there are a few possible outcomes for whatever savings remain within, including but not limited to the following:
There are a few other financial matters that need to be addressed before your estate can be settled properly. For instance, prior to closing your accounts, your financial institution may request several documents to prove that you’re dead, such as:
As mentioned, if there are no beneficiaries listed on your accounts and you didn’t leave a will, your financial institution will wait until the provincial or territorial government designates an administrator for your estate. Once that’s done, a notice from the court and a death certificate will allow the administrator to secure the accounts.
A joint bank account is when you open a shared account with one or more people (usually your spouse or common-law partner). These accounts are often used for the sake of convenience or because one of the account holders has a health condition that prevents them from banking responsibly.
As such, a joint account can be a good way of saving more income and paying larger bills. There may even be certain tax benefits if you or another account holder transfers money from their personal account. Once again, there are a few things that can happen to your joint bank account if you pass away:
Before you open a joint account, keep in mind that the circumstances of what happens to it when you die may change according to the terms set by your financial institution, the conditions of your will, and the provincial or territorial laws that control your estate.
For example, during the probate process, your estate beneficiaries may challenge the terms of the surviving holder’s ownership over the account if they have an interest in it. In that case, the surviving account holder may have to showcase their Power of Attorney or defend your intention in some other way to claim the joint funds.
Any bank account where one or more beneficiaries are named is known as a “payable on death” account. In such scenarios, the beneficiaries will automatically be entitled to collect your remaining funds right away. As long as they can prove their identity and produce a death certificate, the account will not go to probate.
However, if one or all of the beneficiaries die before you, the funds will once again be transferred to your estate executor, who will distribute them in accordance with standard government regulations.
Unfortunately, your death could come suddenly and leave your loved ones struggling to pick up the pieces, particularly when it comes to your remaining finances. Although that may happen years down the line, it’s always a good idea to start planning as soon as possible to avoid these kinds of complications when the day comes.
Here are a few preventative measures you can take to minimize any risks:
Find out how life insurance can protect your family from debt.
As worrisome as it can be, preparing your finances for your eventual death is an extremely important part of protecting your loved ones and seeing that they’re taken care of in the years that follow.
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