The loss of a family member or close friend can be very overwhelming, particularly if you’re also responsible for their financial affairs, actioning their Will and arranging a funeral. Taking ownership of your loved one’s deceased estate is probably your last priority when someone dies. But knowing what needs to happen and what can be paid from an estate account can make a difficult time that little bit easier.
We’ve collated some of the most common questions about finalising deceased estate accounts, to support you through the difficult process of navigating a loved one’s finances. This guide is broken down into the following sections:
- What happens to bank accounts when someone dies in Australia?
- What is a deceased estate?
- What is an executor of a Will?
- What are an executor’s responsibilities?
- What does ‘grant of probate’ mean?
- How is the deceased's bank account accessed?
- How long does it take for a deceased estate account to be settled and closed?
- What can be paid out of a deceased estate account?
- Can I pay for a funeral with the estate?
- Final thoughts on deceased estates and executor duties
For more general information on handling a loved one’s affairs, read our article When someone dies what do I do?
1. What happens to bank accounts when someone dies in Australia?
When someone dies, their bank or financial institution will freeze their accounts where they were the sole account holder, to prevent further transactions and ensure the estate is protected. Any joint bank accounts, however, will continue to operate as normal. Accounts where the method of operation was ‘both to sign’ will now only require one signature.
Any credit card debt or personal loan debt will be paid from the deceased’s bank and savings accounts, and any credits will be paid out to their beneficiaries in line with their Last Will & Testament. If there is no Will, ownership of the account and any estate assets and debts will be transferred to the Next of Kin or estate administrator and the accounts will be closed.
2. What is a deceased estate?
When a person dies, they often leave behind assets like money and property, as well as debts that need to be managed and finalised. This is often referred to as a deceased person’s estate, or deceased estate.
3. What is an executor of a Will?
If you have been named as an executor of a Will, it means the deceased has appointed you to administer their estate. There can also be more than one executor.
A family member, close friend or trusted advisor will generally be named as an executor, but some people appoint a solicitor. However, it is not necessary to hold any professional qualifications to act as executor.
4. What are an executor’s responsibilities?
An executor is responsible for taking ownership of the deceased person’s estate and distribute the assets to the beneficiaries in accordance with their Will. As an executor, you will also be responsible for arranging and paying for the funeral and other administrative expenses of the deceased.
The executor’s list of duties may include the following:
- locating the deceased’s original will and notifying beneficiaries;
- arranging the funeral;
- protecting the assets of the estate by closing the deceased’s bank accounts;
- determining the deceased’s assets and debts;
- settling debts owing to the deceased;
- applying for a grant of probate;
- paying the deceased’s debts from the assets of the estate;
- arranging the deceased’s tax returns;
- distributing the deceased’s assets in accordance with their Will.
Other things an executor may need to take care of include:
- advising Centrelink or other government agencies of the deceased’s death;
- redirecting mail;
- arranging for pets to be cared for;
- cancelling services, mobile phone contracts and other utilities;
- paying outstanding bills
You will need to make a list of everything the deceased owned or was entitled to. If the estate is to be divided among a number of beneficiaries, the assets may need to be valued. The list could include a home, car, furniture, jewellery, as well as money in bank accounts, shares and other investments, insurance policies, and superannuation and employment entitlements.
Next, you will need to apply for a grant of probate through the probate registry of the Supreme Court in your state.
5. What does ‘grant of probate’ mean?
Probate is a legal process required to validate a deceased person’s Will, to be carried out by an executor named in the Will. Grants of probate and letters of administration are collectively referred to as grants of representation. A grant of representation is a legal document authorising an executor (or executors) to manage a deceased estate in accordance with the provisions of their Will.
When applying for probate, you will need to complete a number of forms and provide documents such as a Death Certificate.
6. How is the deceased's bank accessed?
Firstly, if you are the estate executor, administrator, or Next of Kin, you’ll need to contact the bank or financial institution as soon as you can after the person has passed away. Most will have specialist support teams available to assist those in your position. You’ll then need to complete some paperwork, like filling out a deceased customer notification form, which confirms your loved one’s details. This will allow the bank to identify the accounts held in the deceased person’s name. The bank will also need to verify your own authorisation before allowing access to your loved one’s accounts.
The bank will usually need to see original versions or certified copies of the following documents: the deceased person’s death certificate, their current Will, and the deeds of any trusts they held. Depending on the value of the estate – in terms of property and assets – you may also need a grant of probate (if there is a valid Will), or a letter of administration (if there is no valid Will).
Once the bank has received everything they need, the estate will be settled and the money and assets will be released to the relevant beneficiaries. A stop will also be placed on the accounts so that direct debits and recurring payments will end, however some regular payments might continue. Upon request, your bank can provide a list of regular payments on the account to help you arrange to stop future debits.
7. How long does it take for a deceased estate account to be settled and closed?
It can take some time – often months – for someone’s estate to be administered before funds are available and often there will be unexpected expenses when someone passes away and this process differs between specific banks and financial institutions. We suggest that you contact your financial institution for further information.
However, banks can assist by releasing funds from the estate to help cover funeral, estate and business-related expenses in the meantime. We will explain how this works in more detail below.
8. What can be paid out of a deceased estate account?
An executor, Next of Kin or administrator can usually request that specific existing payments continue, or arrange assistance with paying for funeral expenses if needed. We explain that further in the next section.
The financial institution should be able to release funds from the deceased estate to cover other costs like unpaid bills or expenses relating to the estate, like rates and body corporate fees.
There’s also the option of setting up an ‘estate of the late’ transaction account with the bank, which will enable the executor to access money from the estate to cover estate expenses.
The bank can also release funds to cover business expenses upon request from the executor or Next of Kin; company director, chairman secretary or treasurer; or a trustee.
9. Can I pay for a funeral with the estate?
Yes, the funeral can generally be paid with the estate. The bank can release funds from the estate to pay for funeral costs while the account is frozen. This can be paid to the executor or administrator acting for the estate, or the person who organised or paid for the funeral with their own money. They just need to provide the bank with an invoice or receipt for the funeral service.
At Bare Cremation, we understand that the first week after your loved one has passed is such an emotionally sensitive time for you and not necessarily right for putting on a large and expensive funeral service. You might want to consider carrying out a direct cremation to allow you the time to organise the perfect memorial send-off for your loved one in your own way later on, when you are ready.
If you are organising a funeral service directly after your loved one has passed, funeral providers will generally require services to be paid upfront, which will likely be before the estate is released. Most providers require an upfront payment before the service takes place. A Bare Cremation, however, is invoiced at the end of our service process so we are not requesting payment until after the cremation has taken place.
Your loved one may have already made arrangements for their funeral. If they had a prepaid funeral, contact this funeral provider to engage their services. If they had a Funeral Bond or Funeral Insurance, contact the company to organise the release of funds for funeral expenses. If no previous arrangements were made, the executor or senior Next of Kin has authority to make funeral arrangements.
10. Final thoughts on deceased estates and executor duties
The responsibility of an executor of a Will can be overwhelming and may prove complicated for those without legal or business knowledge. Administering an estate usually takes months and can be rather time-consuming, so it’s important to remember you are grieving and your priority is to look after YOU.
Allow yourself time to grieve and take time out if needed. Don’t feel rushed or pressured into making decisions. Take the time to make the right decisions for you, your family, your loved one and your financial situation. And don’t feel you have to do everything alone. Call out for help from family, friends or even professionals. There are also many bereavement services available to assist. A place to start would be the Australian Centre for Grief and Bereavement or for more immediate help call Lifeline on 13 11 14.
Above all – look after yourself. There is no rush, so ensure you are sleeping, eating, taking time out for yourself and taking care of your emotional health.
We hope this guide to deceased estate accounts has provided you a better understanding of deceased estates and what can be paid from them.
This article is not legal advice. You should chat with your solicitor or accountant for specific advice on your personal or financial situation.