Introduction
Deceased accounts are bank accounts owned by a person who is no longer alive (deceased). When banks are notified that an account has been deceased, they freeze the account(s). The money and belongings (if stored in a bank locker) are handed over to the legal heirs as per the court's directions.
Understanding a Deceased Account
When the account holder dies, the legal heirs must inform the banks as soon as possible. They must furnish the bank with the death certificate, ID proof, and account details (if they know).
If the deceased person owes nothing to creditors, the proceeds from the deceased's accounts will be handed over to the legal heirs. If there is any unpaid debt, the creditors will recover the account balance. The remaining amount, if any, will be handed over to the kin.
If the deceased accounts are pay-on-death accounts, the bank will hand over the proceeds to the nominee or beneficiary when the account holder dies. The nominee or beneficiary should report the account holder's death with proper proof of identification.
The proceeds of joint accounts held with a deceased person will result in the surviving owner gaining full ownership over the account. The surviving owner may continue to operate on the account or close it. Joint accounts held with a deceased person are not considered deceased accounts.
How to Handle Deceased Account?
When the account holder dies, their bank account must be treated carefully. The first thing is to notify the bank of the death of the individual and give a copy of the death certificate. When the bank is informed of this news, it will freeze the account to prevent any unauthorised transaction of funds until the legal process is completed. The nominee or legal heirs have to submit documents like the death certificate, residence proof, identification documents, and if required, legal heir certificates. This ensures money in the deceased's account is transferred to the legal beneficiary per the bank's rules and legal procedures. This involves accuracy and following all legal formalities to perform a smooth and legal transfer of assets.
How Does a Deceased Account Work?
Creditors are preferred over legal heirs and kin when an account becomes deceased. Hence, deceased accounts become extremely important for the lenders if the deceased has any unpaid debt. The legal heirs and kins are not liable to settle the deceased's liabilities. Therefore, creditors can recover their dues only by paying whatever is left in the deceased account and estate.
Benefits of Intimating About Deceased Accounts to Banks
- Prevents Unauthorised Transactions: Freezing the account prevents unauthorised withdrawal or theft of money.
- Guarantees Legal Compliance: Adherence to the right procedure guarantees compliance with banking and legal laws to avoid future litigations.
- Avoids Legal Problems: Properly documenting and following bank procedures avoids legal problems between beneficiaries and future potential legal problems.
- Offers Financial Security to the Beneficiaries: Money transfer offers financial security to the beneficiaries or dependents of the deceased individual by guaranteeing that they get their due assets.
