Concerned about how your bills will be paid after you die? Upon being advised of a death, the first thing the bank will do is to freeze any account in the sole name of the deceased.  This means that any automatic payments or direct debits will also be cancelled.

 

The accounts will remain frozen for withdrawals until the bank is provided with the appropriate authority to access the funds.  If there is over $15,000 with any one institution as at date of death a grant of administration, either Probate or Letters of Administration, will be required.  For estates under this limit, the bank have small estate procedures which will enable the executor of the will or the appropriate family member to access the accounts.

 

This leads to the common question – how is the funeral account going to be paid?  Fortunately, there is an exception under the Administration Act 1969 allowing banks to pay or reimburse the funeral expenses before the grant of administration is received.  Each bank has its own procedures to do this but generally these are not particularly onerous.

 

As far as other bills and expenses are concerned – either the creditor just must wait until a grant of administration is received and funds can be accessed, or sometimes family members are able to pay the expenses and get reimbursed when funds are available.  Fortunately, the time taken for the court to process applications for a grant is now only about a month, so bills can be paid after the grant is received.

 

Generally, suppliers such as power companies and rest homes understand the delays caused when someone dies – if they are told about the death they will wait for funds to be available. The exception to this is insurance companies.  If the annual insurance premium is due or if it is paid by instalments, it is important that payments are kept up to date and that the insurance company is immediately advised of the new contact details.

 

So why don’t I save all the hassles and make my account joint with one of my children? Because you then cause a whole new bunch of problems!

 

Joint accounts do not pass by will, instead they pass to the surviving owner by survivorship.  This means that after you have died, joint accounts belong to the joint owner who may or may not be willing to transfer the funds to the estate.  There will also be tax complications with the incorrect allocation of the interest between the joint owners and, most frustratingly for the estate beneficiaries, there will likely be delays to the estate administration if any of the funds are on term deposit since term deposits cannot be broken without penalty if there is a surviving owner.

 

We are experienced at dealing with creditors after a client has died, and we find that with good communication there are generally very few issues.  We don’t see the need for clients to make special arrangements to provide for cash availability immediately after death.

 

Want to make sure all of your affairs are in order or simply have questions about what happens after? Get in touch with our team today!

 

Written by Graeme Ogier.