What Happens to the Money in a Bank Account After Someone Dies? Here’s What M’sians Should Know

When a person dies, what happens to the money left in their bank account? Does the family automatically get it, or can a spouse simply withdraw the money?

And if nobody claims it, does the bank eventually get to keep it? Don’t worry, the money doesn’t suddenly become the bank’s. Here’s what actually happens.

For illustration purposes

First, the bank account will be frozen

When a person dies, the money in their bank account becomes part of their estate, which basically means the money, property, and other assets they leave behind.

According to the Malaysian Bar, the deceased person’s assets, such as their bank account, will be frozen. This means family members can’t simply continue using the account as usual.

So even if a spouse or family member knows the ATM PIN or online banking password, they shouldn’t assume they can just withdraw the money.

The family will also need to notify the bank and provide the necessary documents. The exact requirements may differ between banks.

For example, CIMB asks the next of kin to provide a written request for the deceased person’s account information, along with a death certificate and a marriage or birth certificate to prove their relationship.

What happens next largely depends on whether the deceased person left a valid will.

If there’s a valid will, here’s what generally happens:

1. The executor applies for a Grant of Probate
   The executor named in the will applies for a Grant of Probate, which gives them the legal authority to administer the estate.
2. The executor gathers and manages the assets
   Once authorised, the executor can deal with the deceased person’s assets, including their bank accounts.
3. Debts and expenses are settled
   Before the remaining estate is distributed, relevant debts and expenses need to be settled first.
4. The remaining assets are distributed
   The executor can then distribute what remains according to the instructions in the will.

What if there’s no will?

This is where the process can be different.

1. Someone needs to be appointed to manage the estate
   Instead of an executor named in a will, an administrator needs to be legally authorised to manage the deceased person’s assets.
2. They may need to obtain Letters of Administration
   Depending on the type and value of the estate, the appropriate process may involve applying for Letters of Administration or going through another relevant estate-administration route.
3. The administrator can then deal with the bank
   Once the necessary authority has been obtained, the administrator can produce the relevant document to the bank to deal with the deceased person’s money.
4. Debts are settled before the remaining estate is distributed
   The administrator is responsible for settling relevant liabilities before distributing the remaining estate to the rightful beneficiaries.

For illustration purposes

So, how long does the process take?

There isn’t one fixed timeline, but families should be prepared for the process to take anywhere from a few months to several years.

According to AmanahRaya, estate administration can take 3 months or several years, depending on factors such as the nature of the assets and whether any disputes arise.

For certain types of estates handled through AmanahRaya, its published estimates range from around 4 months to 12 months, provided all the necessary documents and information are received.

Having a valid will can make things clearer because an executor has already been named and instructions for distributing the estate have been set out. Without a will, additional steps may be needed to appoint an administrator and determine how the estate should be distributed.

However, having a will doesn’t guarantee that the process will be completed within a specific period. The size and complexity of the estate, incomplete documents, disputes and the administration route involved can all affect how long it takes.

AmanahRaya is also one organisation that can help families with estate administration, depending on the circumstances.

So, no, money in a bank account doesn’t simply disappear after someone dies, and the bank doesn’t automatically get to keep it.

Moral of the story? Keeping important financial and estate documents organised, and making sure a trusted person knows where to find them, could save loved ones a lot of confusion later on.

Also read: Heartbroken M’sian Shares How ‘Golden Child’ Sibling Drained Sick Elderly Dad’s Savings & Abandoned Him