What happens to bank account when someone dies without beneficiary

After someone dies, someone (called the deceased person's 'executor' or 'administrator') must deal with their money and property (the deceased person's 'estate'). They need to pay the deceased person's taxes and debts, and distribute his or her money and property to the people entitled to it.

Executor or administrator

If the deceased person left a valid will, the person who deals with the estate is called the deceased person's 'executor'.

If the deceased person left an invalid will or no will at all, the person who deals with the deceased person's estate is called an 'administrator'. An administrator may be appointed by the court before they can deal with the deceased person's estate.

If you have doubts about these roles, you should get legal advice from a solicitor.

Find out more about making a will and what to do if there is no will.

Accessing money, property and other assets

If the deceased person left a lot of money or property in his or her estate, the executor or the administrator may have to apply for a grant of representation to gain access to the money. An application for a grant is made to the Probate Registry.

If the deceased person left a valid will, the Probate Registry will grant probate of the will. If the deceased person left an invalid will or no will at all, the Probate Registry will issue a grant of letters of administration.

Find out more about probate in Northern Ireland and how to apply for a grant.

Tax and National Insurance

Some estates have to pay Inheritance Tax. Some or all of this must be paid before the court will issue a Grant of Probate of Letters of Administration. The deceased may also be owed a tax rebate, or may have to pay some tax.

Contact HMRC as soon as you can, they will tell you what tax needs to be paid and whether you need to fill out a Self Assessment tax return for the deceased.

You should also contact the National Insurance (NI) Contributions Office to cancel the person’s NI payments if they were self-employed or paying voluntary NI.

Property

'Property' includes houses, real estate generally, shares, antiques, jewellery, works of art, and intangible property such as patents and copyrights.

If the deceased held property in their sole name, and they left a valid will dealing with the property, then the property will usually pass in line with the will. If the deceased left no valid will, or a will that did not deal with the property, it is dealt with under the law of intestacy.

If the deceased held property with another person or people, the deceased's executor or administrator needs to find out how the property was owned. Where the property is a house, there should be written documentary evidence of the type of ownership.

If you sell the deceased's property or other assets at a gain (profit) Capital Gains Tax will be payable if the gain above the market value at the date of death (not the date of acquisition) exceeds the current Capital Gains Tax threshold.

Find out who inherits if someone dies without a will.

Jointly owned property

If the deceased person owned property with another person or people as 'beneficial joint tenants', the deceased person's share automatically passes to the surviving joint owner(s). Property owned as joint tenants does not form part of a deceased person's estate on death. But the value of the deceased person's share of jointly owned property is included when calculating the value of the estate for Inheritance Tax purposes.

In other cases, where the deceased person owned property with another person or people, the deceased person's share of the property forms part of their estate and is dealt with by the executor under the terms of the will or by the administrator under the law the law of intestacy. Administration of the estate is likely to be complex and seeking independent legal advice is recommended.

Benefits

If the deceased was receiving benefits, you'll need to tell the Social Security Agency as soon as you can. You can use the Bereavement Service to do this.

Blue Badge

If the deceased was a Blue Badge holder, the badge must be returned to the Blue Badge Unit.

Financial documents you'll need

Some of the documents you will need to find include the deceased person's:

• tax and National Insurance affairs
• bank, building society and savings' accounts and certificates
• stocks and shares
• state and private pensions
• state benefits
• car, health, home and life insurance policies
• utility bills
• other unpaid bills
• property deeds
• mortgage payments
• rent payments
• credit card and store card payments
• loan payments and other formal debts

If the deceased was self-employed or a business partner you will also need to collect together any documents linked to their business.

Timescales

You have one year from the date of the deceased's death to sort out the estate before distributing it. After a year, you could become liable to pay interest on any undistributed assets.

Bear in mind that all bills, debts and taxes have to be settled before you can share out the deceased person's remaining money, property and belongings.

Small estates and dealing with immediate debts

If the deceased person left a small amount of money (usually £20,000 or less) in his or her estate, it may not be necessary to get a grant of probate or letters of administration to withdraw money from the deceased's account with a bank or financial institution.

This can be useful if money is needed from the deceased’s estate to pay for immediate expenses such as the funeral, mortgage or house insurance. Each bank or financial institution has its own rules on what proof it requires and how much money it will release to the person acting in the estate of the deceased.

If the deceased person had several bank accounts, each holding only a small amount of money, but in total exceeding £20,000, then it may still be possible to access the money in those accounts without a grant of probate or letters of administration. Again, each individual bank or financial institution will decide to release the money or not release it to the person acting in the estate of the deceased.

If a bank or financial institution does not require a grant, it may ask the person acting in the estate of the deceased to sign an indemnity. The purpose of this is to protect the bank or financial institution if it later turns out that the money has been paid to the wrong person.

Payments you may have to make

You may also need to pay:

• rent or mortgage on the deceased's home
• funeral costs
• any unpaid bills
• formal debts owed by the deceased
• insurance on the deceased's home
• other payments to protect the estate assets

Paying debts

As the executor or administrator of the estate, you have a legal responsibility to pay off any debts the deceased had before you can distribute the estate.

You must show that you have made an effort to tell as many people as possible about the deceased’s estate. This is to give anyone with a claim the chance to come forward.

You can do this by placing a notice in the Belfast edition of The Gazette, the official newspaper of the UK government, and a local newspaper. If you don’t you could be liable if someone comes forward with a claim after you have distributed the estate.

By law anyone who wants to claim has two months and one day from the date of the notice being published to come forward.

If the deceased’s estate includes property, you should also place a notice in a newspaper local to the property.

When placing a notice in the Gazette for Northern Ireland estates, you should choose the Belfast edition. If the deceased had close business or personal ties to England or Wales you may also want to place a notice in the London edition.

Find out more about placing a notice, including fees on The Gazette’s website.

Money you may be able to collect

Money owed to a deceased person is part of their estate. You may be able to claim:

• tax rebates
• life insurance
• money from pension schemes
• money from lost or forgotten pensions and savings
• capital from the deceased's business
• formal debts they are owed

However, any informal loans made by the deceased don't have to be repaid by the borrower.

Where to keep money belonging to the estate

Whatever the size of the estate, it's a good idea to open a separate 'estate account' with a bank or building society, so that all transactions about the administration of the estate can be recorded.

Beneficiaries are entitled to go to the court and seek an order that the executor or administrator provide them with a full inventory of the estate and a copy of the estate accounts.

Money in joint accounts

The deceased person may have held money with another person in a joint bank or building society account. Normally this means that the surviving joint owner automatically owns the money. The money does not form part of the deceased person's estate for administration and therefore does not need to be dealt with by the executor or administrator.

However, a deceased person's share in joint property is treated as part of their estate for inheritance tax purposes, both on death and on gifts made during their lifetime.

Lost or forgotten accounts

Find out how to find a dormant or lost bank or building society account.

Pension schemes

Different rules apply to different pension schemes. The executor or administrator will need to contact each scheme the deceased belonged to and ask if:

• death benefits are payable
• there is a pension for a spouse, civil partner or children
• any of the investment has become part of the deceased's estate under a self-employed pension scheme

Remember that an ex-spouse or former civil partner may have rights to some of the pension, depending on the terms of the divorce or dissolution settlement.

There is a Pension Tracing Service, that you can use to trace a personal or workplace pension scheme.

Life insurance policies

It's advisable to contact the insurance company as soon as possible. They'll tell you what to do and what documents they need before they can pay out.

It's also advisable to check carefully the amount that should be due, and to whom, under the policy before signing for any money. Also, remember to make sure policies are still in force, and how much they are worth, before committing to funeral costs. Always get a receipt from the insurance company when cashing in a policy.

Preventing identity theft

Sometimes fraudsters try to take the deceased person's identity to steal money from their estate.

You can apply for protective registration to prevent this.