If you die ... bank accounts?

It's not on my immediate to-do list but death comes to us all. CBA's booklet on this says:

"Individual accounts Once the Bank has been notified, any accounts held solely in the deceased’s name will be stopped and no further transactions (i.e. deposits, cheques or direct debits) made after that date will be allowed. Any account authorities that allow third party signatories or regular bill payments will also be cancelled. In most cases, only direct credit payments will be accepted into the account after this time. Generally, only the amount of the funeral expenses will be released."

But how does this work in the context of an IP account which will continue to have a steady flow of rent and expense transactions after you die? Note, single, so no partner picking up a joint account.

 

No withdrawals can be made. The acct gets frozen.

From memory credits in will still be accepted, but I may be mistaken.

This is not the banks fault. It’s law.

Blacky

 

Once you are dead you cannot transact and no one else can until an executor/administrator is appointed by the courts.

This can cause issues, especially where funds have been shifted around between family members - even when there are written loan agreements.

If bills are coming in and a person is deceased someone could pay them, and get reimbursed later, or tell the relevant creditor what has happened so they put a hold on things for a while.

Sometimes banks will allow accounts to be accessed though - for funeral expenses etc.

 

Another issue to consider is joint accounts. Generally, but not always, the surviving owner receives the money.
Example of what could go wrong. young johnny goes and opens a bank account with nanna as she is getting old. Nanna dies leaving $500k of her money in the account. Johnny receives it and she only has $1000 worth of shares which pass to her 3 children.

 

Tinder:

Seeking rich granny. I like short zimmer walks in the park, sipping tea on the veranda and sharing oxygen. Prefer terminally ill. Swipe Right.

pinkboy

 

The legal process for death is that the deceased accounts are frozen until such time that probate is granted. I encounted one bank (CBA) who saw a Bpay transaction after date of death and when they were told of the death they not just froze it but cancelled the account and created a new one to limit theft since only a unauthorised person could have made the payment (daughter). Daughter then had to apply to have the funeral expenses paid and they agreed.

A executor isnt appointed on death - Occurs with probate.Probate is the legal process of the Court granting approval to an executor. Until probate is granted the public trustee is considered the executor even if there is a will. Its not a automatic right to use the deceased property until legally permitted. Just because you are married doesnt mean you get the assets. Or the expected executor.

I saw a recent example where a deceased person had a IP and the law firm handling probate etc wrote to the real estate PM and instructed no costs were to be remitted from rent excepting agent fees.

 

This isn't correct, at least under NSW law.

Immediately upon death the assets of the deceased vest with the NSW Trustee. They are not considered the executor, but a temporary trustee until the will or court appoint trustee can act.

see s61 Probate and administration act.

 

Good explanation of that difference.

Joint assets may vest on death however or is that also on probate ?

 

If held as joint tenants automatically on death
If tenants in common then passess via the will

 

I remember when I was in banking one of our clients died. He was a farmer and the entity was a partnership with him, wife and two sons.

We were made aware of the death and had to freeze the accounts. It was just before seeding which meant they couldn’t access their funds to plant that years crop. It was an absolute mess. On top of the stress of Dad/hubby dying they had to deal with not having money available for the years crop.

We managed to as well as possible and basically gave them an unsecured loan (we couldn’t mortgage the farm as Dad was an owner). There wouldnt be many banks who would have been willing to do it.

Blacky

 

There was a real estate agent who was a sole trader and he held a number of deposits in his trust account. He died...

They had to make an urgent application to the supreme court to get access to the trust accounts so the properties could settle

 

Also sole director shareholder companies pose a problem. No one can run it until the LPR is appointed.

 

Use a property manager

 

The executor will take over things if you have a will. If you don't someone will, or may, apply to administer your estate - usually someone who will benefit under the intestacy laws. They can then pay bills, do tax returns and wind up your estate and transfer your property to the new owners.

 

A tax agent is a similar issue. Automatic lapsing on death. I have assisted and acted as lodging agent to overcome this awful issue when local agents die and ATO are pretty good about it provided you dont continue to use the deceased tax agent number. (Uninsured too). One I recall I met him one afternoon and next morning he didnt show up for some CPD sessions....Gonski

 

I've got the will - updated a few weeks ago - but just wondered what happens in the weeks between the death and probate being granted. Presumably once probate happens the executor sends out dozens of copies of it with executor account details to interested parties (managing agents, councils, water, insurance etc) and all the bottled up transactions are released. As I've no family here, my solicitor is my executor - won't be cheap but at least when it comes to selling the properties it's all under one roof.

 

The Tibetans call it the 'bardo thodol' ! The intermediate state between death and Probate is a legal limbo. Nothing can happen really.