Retention Period for Bank Statements After Death

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Retention Period for Bank Statements After Death

Death is a sad time for families, but it can also be confusing. A significant question is: What happens to a person’s money upon their death? This article will explain what you need to know about bank accounts after someone dies.

The Basics of Bank Accounts After Death:

When someone dies, their money doesn’t just disappear. It goes to other people. But who gets it? That depends on a few things.

Named Beneficiaries Get the Money First:

A beneficiary is an individual who is designated to receive the money. If the deceased person chooses a beneficiary, that person will receive the money. This is the easiest way to pass on bank accounts.

Joint Accounts Go to the Other Owner:

Some bank accounts have two owners. If one owner dies, the other owner gets all the money. This happens immediately; the bank requires proof that one of the owners has died.

What If There’s No Beneficiary or Joint Owner?

If there is no beneficiary or joint owner, the situation becomes more complicated. The money becomes part of the deceased person’s “estate,” which includes all the possessions they owned at the time of their death.

How do Estates Work?

An estate requires someone to manage it. This person is called the executor. The executor has a big job. They have to:

  1. Pay any bills the dead person left
  2. Pay taxes
  3. Give out what’s left to family members

If There’s a Will

A will is a document that states who should receive someone’s belongings after their death. If there’s a will, it names an executor. The executor follows the instructions outlined in the will.

If There’s No Will

What if someone dies without a will? The court picks someone to handle the estate. This person is called an administrator. They do the same job as an executor.

What Banks Do When an Account Holder Dies?

Banks have specific rules regarding what happens when a customer passes away. Here’s what usually happens:

  1. The bank finds out the customer died
  2. They ask for a death certificate
  3. They freeze the account
  4. They wait for instructions from the executor or administrator

How Long Does This Take?

Dealing with a dead person’s money can take a while. Depending on the complexity of the estate, it may take a few weeks or even months.

Keeping Bank Statements After Someone Dies:

After someone dies, you need to keep their bank statements. But for how long? Here’s what experts say:

  • Keep statements for at least three years
  • Please don’t keep them for more than seven years
  • Shred old statements to protect against fraud

Why keep them? There are a few reasons:

  1. The IRS might do an audit
  2. There might be legal issues to solve
  3. Family members might have questions

Exceptional Cases: Business Accounts

If the person who died owned a business, things get more complicated. Business bank accounts need special care. You should keep business records for at least seven years.

What About Retirement Accounts?

Retirement accounts are different from regular bank accounts. These include items such as 401(k)s and IRAs. You should maintain records for these accounts for an extended period. They’re essential for taxes and estate planning.

Who Can See a Dead Person’s Bank Statements?

Not just anyone can access someone’s bank statements after they pass away. Only certain people can see them:

  • The executor or administrator
  • People named in the will
  • Sometimes, close family members
  • Government officials, if needed

What If No One Claims the Account?

Sometimes, banks are unaware that a customer has passed away. If no one claims the account, it becomes “abandoned.” After a while, the state takes over the account.

How to Protect Your Bank Accounts?

Want to make things easier for your family when you die? Here are some tips:

  1. Name a beneficiary for each account
  2. Keep your bank info organized
  3. Tell someone you trust where to find your bank info
  4. Think about making some accounts joint accounts

Common Questions About Bank Accounts After Death

People often have questions about this topic. Here are some common ones:

Can creditors take money from a dead person’s account?

Sometimes. If the person owed money when they passed away, creditors may attempt to recover payment from the estate.

What if the dead person owed taxes?

The IRS can still collect taxes after an individual’s death. The executor must address any tax issues.

Can a bank account be used to pay for a funeral?

Yes, if the executor approves it. Funeral costs are usually paid before other bills.

What if there’s not enough money to pay all the bills?

If there isn’t enough money, some bills may not get paid. There are rules about which bills get paid first.

Wrapping Up:

Dealing with finances after someone passes away can be a challenging task. But knowing the basics can help. Remember:

  • Named beneficiaries get money first
  • Joint accounts go to the other owner
  • If there’s no beneficiary or joint owner, the estate handles the money
  • Keep bank statements for 3-7 years
  • Only certain people can see a dead person’s bank info

Planning can make things easier for your family. Consult a lawyer or financial advisor if you have further questions.