Can Money Be Deposited in a Deceased Person's Account?

When a loved one passes away, many wonder about the status of their bank accounts and whether money can be deposited. This article aims to clarify the legalities and procedures involved in handling a deceased person's account, focusing on the United Kingdom.

Overview of Legal Restrictions

No, money cannot be directly deposited into a deceased person's bank account. Once an account holder dies, their bank accounts are usually frozen to prevent any further transactions, including deposits. The funds in the account are typically subject to the probate process, where the deceased's assets are managed and distributed according to their will or state laws if there is no will.

To handle the financial affairs of a deceased person, it's crucial to contact the bank and follow the necessary legal steps. These steps vary depending on the type of account and the presence of a will or nominee.

What Happens Before Probate?

Before the probate process is initiated, money can still be deposited into the deceased's account. This is because, until the bank is formally notified of the death, the account is not usually frozen.

Once the bank is informed of the death certificate, the account is typically frozen if it is a single holder account. However, if the account is a joint account and there is a surviving joint holder, the account may continue to operate. In these cases, the surviving joint holder can continue to manage the account without additional legal steps.

Deposits After Notification

Once the bank is properly notified of the death, all deposits to the deceased's account are typically blocked. The bank will only allow these deposits to be processed if the proper legal authority provides consent.

There are specific cases in the UK where the bank may allow certain types of transactions if they receive explicit consent from the Trustee or other legal representative. For example, if the deceased's will names a Trustee, certain types of payments may be processed with their consent.

Payment Handling and Probate Process

In the UK, there are certain methods for handling payments into a deceased person's account:

Method 1: Through the Bank Account of the Deceased

If the bank is notified of the death and the account is frozen, no entries will be allowed on the account without the consent of the Trustee. The bank will notify the Trustee if a payment is made and apply it under a special code.

The Trustee must have a Court Order to have full control of the bank account to request the bank to inform them who deposited the money.

Method 2: Through the Solicitor or Accountant's "Client Account"

Another method involves depositing funds into a "Client Account" held by a Solicitor or Accountant. This account is managed under legal guidance and allows for controlled transactions related to the deceased's estate.

Handling Debts and Other Financial Obligations

When a person dies, outstanding debts such as cheques, standing orders, and direct debits are typically returned to the sender with the message "Debtor Deceased." These entries usually appear on an "emergency suspense" account and are examined daily.

The Payee/Beneficiary of the document will receive the actual voucher (such as a cheque) and must then file a claim for the debt with the Trustee of the Will. The Trustee is responsible for proving the debt and processing it through the estate.

If the deceased left funds in their estate, these funds will be used to clear debts according to a specific order. Preferential creditors (such as Customs Duties, Excise Duties, and tax authorities) are paid first, followed by principal creditors. Once all debts due to the estate have been settled, any remaining funds will be distributed to the beneficiaries as per the Will.

Funeral and Estate Administration

If the deceased dies insolvent and has no surviving line of descent, the local authority may provide a funeral paid for by the state. The deceased is typically buried in a simple grave in the cemetery. However, if there is a surviving family, they may be expected to pay for the funeral and cremation.

In some cases, the government provides "Grants" to individuals in financial need for funeral costs, though the grant does not usually cover the entire cost.

Understanding the legal and administrative processes involved in handling a deceased person's account is crucial to ensure that financial matters are addressed appropriately and in accordance with the law.