The death of a loved one may result in a sudden and unexpected lack of access to financial resources, especially if appropriate legal steps have not been taken beforehand. Banks, in accordance with the regulations, automatically block the deceased's individual accounts until the completion of the inheritance proceedings, which can take up to several months. Magdalena Łabuda from the Babiak law firm explains the legal complexities of this difficult situation to us.
Access to bank accounts and financial products
To avoid such difficulties, it is worth taking care of solutions in advance that will allow loved ones to access the collected funds. One of them is the disposition of the contribution in the event of death – a mechanism that allows for the quick transfer of money to loved ones without having to wait for the completion of inheritance formalities.
What happens to a bank account after the owner dies?
Upon the death of a bank account holder, certain legal consequences occur:
- Powers of attorney expire – If the deceased gave someone power of attorney over their bank account, it expires upon their death. This means that even someone who was previously able to freely manage the account will no longer be able to withdraw funds or make transfers.
- The individual account is blocked – banks automatically freeze access to the deceased's account until a legally binding decision on the acquisition of inheritance or a notarial certificate of inheritance is presented. Without these documents, no one, not even the spouse, can dispose of the funds.
- Joint account remains active – if the deceased had a joint account with their spouse, the other joint owner can generally continue to use it without any problems. Joint accounts are not subject to automatic blocking, and the accumulated funds are available for current needs.
- The funds in the account are part of the estate – in the case of an individual account, the accumulated money is subject to the general rules of inheritance, unless the account owner has previously established an instruction for the deposit in the event of death.
Disposition of contribution in the event of death
In order to allow loved ones quick access to the funds accumulated in the account, the owner can establish a disposition of the deposit in the event of death. This is a special authorization that allows the bank to pay a specified amount to selected people immediately after the death of the account holder, without the need to conduct probate proceedings.
The most important rules regarding the disposal of the contribution in the event of death:
¾ It can only be established on savings accounts, savings and checking accounts and fixed-term deposits.
¾ It must be made in writing and submitted to the bank by the account holder.
¾ Money transferred under the disposition is not included in the estate and is not subject to general inheritance rules.
¾ The total sum of all payments under the instructions in the event of death may not exceed the equivalent of twenty times the average monthly salary in the corporate sector (excluding profit bonuses), as announced by the President of the Central Statistical Office for the last month before the death of the account holder.
Worth knowing:
The amount paid out based on the order does not form part of the estate of the account holder. However, persons receiving funds based on the order should report this fact to the tax office within 6 months of the death of the account holder.
Who can be the beneficiary of the disposition?
The deposit can only be disposed of in favour of the closest relatives . The right to receive funds is granted to:
- spouse,
- children, grandchildren, great-grandchildren (descendants),
- parents, grandparents, great-grandparents (ascending),
- siblings.
Worth knowing:
People outside the group of closest relatives – such as a life partner, extended family or friend – cannot be named as beneficiaries of the disposition of the deposit. If someone wants to pass on the funds to others, they must make a will specifying their share of the inheritance.
Is it worth establishing a disposition of the contribution in the event of death?
The disposal of a contribution in the event of death is a practical and quick solution that can make it easier for loved ones to access some of the funds accumulated in the deceased's account. However, it has its limitations – both in terms of the circle of beneficiaries and the maximum amount that can be transferred in this way.
It is a tool that complements financial succession planning, but does not replace a will. If someone wants to distribute their assets in a more detailed manner or to include people outside of their immediate family, they should prepare a will that precisely states their final wishes.
Joint bank account after the death of a joint owner – what is worth knowing?
The death of one of the joint account holders may raise doubts regarding further access to funds. Unlike an individual account, a joint account is not automatically frozen, but its continued operation depends on the terms of the agreement with the bank. Polish law does not directly regulate this issue , therefore the provisions included in the agreement with the bank are of key importance.
Can a bank close a joint account after the death of one of the owners?
The funds in the account belong to all joint holders, not just to the deceased. In practice, this means that the other joint holder should be able to continue using the account without having to go through probate proceedings.
The most common practice in the event of the death of one of the joint owners of a bank account is to transform the joint account into an individual account , which means that the other joint owner retains full access to the funds collected. It is worth remembering, however, that the durability of the agreement with the bank in such a case depends on the decision of the joint owners. It is worth consulting the available options with the bank in advance and defining the rules of conduct in the event of the death of one of them.
To avoid such a scenario, it is worth doing the following in advance:
- Check the account agreement carefully – make sure what rules apply at a given bank in the event of the death of one of the co-owners.
- Contact your bank – Determine available solutions and possible ways to secure your funds.
- Consider other forms of access to funds – e.g. a disposition of a deposit in the event of death , which allows for a faster transfer of some funds without conducting probate proceedings.
- Make a will – if the funds are to go to a specific person, a will will help avoid disputes between the heirs.
The lack of clear legal regulations means that a joint account may become a source of problems after the death of one of the owners. Therefore, it is worth taking care of the formalities in advance to avoid blocking funds and unnecessary complications.
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This article is part of the Guide to Family Legal and Financial Issues. Below are links to other texts:
Contents
1. Access to bank accounts and financial products »
- What happens to a bank account after the owner dies?
Blocking of funds, expiry of powers of attorney, situation of joint accounts. - How to quickly transfer money to your loved ones?
Disposition of the contribution in the event of death – rules, beneficiaries, limits. - Joint account after the death of a joint owner – what is worth knowing?
Can a bank close them? How to secure access to funds?
2. Inheritance: Will or Statutory Rules ? »
Who inherits, how to avoid disputes and ensure division in accordance with the testator's will?
3. Minors as heirs – key aspects »
Property management, legal restrictions, securing the child's future.
4. How to inherit real estate without complications? »
Formalities, division among heirs.
5. Business Succession: How to Protect Your Company After the Owner's Death? »
Succession management vs. family foundation – which solution to choose?
6. Red folder – a way to organize your finances »
How to prepare a set of key documents to make it easier for your loved ones to take over your property?
Magdalena Łabuda from the Babiak Law Firm
