When a person dies in Canada, their bank accounts are typically frozen to protect their assets and prevent unauthorized access. The process of handling these accounts depends on whether there is a will, the type of account, and provincial or territorial laws. This guide explains what happens to bank accounts after death, the role of the executor or estate administrator, and key regional differences.
Understanding the Bank Account Freeze
Once a bank is notified of a death, it will generally freeze the deceased’s accounts. This means that no withdrawals or transfers can be made, including by family members, unless they are legally authorized. Automatic payments such as rent, utilities, and subscriptions are usually canceled, and any pending deposits, including government benefits or payroll, might be sent back to the payer. The freeze remains in place until the estate is legally settled. If there is a joint account, the situation differs based on the province.
What Happens to Different Types of Bank Accounts?
The process of handling a deceased person’s bank account varies depending on the type of account they held.
Sole Accounts
Bank accounts solely in the deceased’s name become part of the estate. The executor or estate administrator must obtain legal authority before accessing funds, typically through probate or an equivalent process. The funds are then used to settle outstanding debts and taxes, cover funeral and estate administration costs, and distribute any remaining funds to beneficiaries according to the will or intestacy laws.
Joint Accounts
Handling of joint accounts depends on the province and specific account terms. In most provinces, funds automatically transfer to the surviving account holder under the right of survivorship, bypassing probate. Quebec does not recognize the right of survivorship, meaning that the deceased’s share of the account becomes part of the estate instead. If the deceased had outstanding debts or legal claims, funds in a joint account could be subject to dispute.
Trust Accounts
Trust accounts operate differently from standard bank accounts. They are managed according to the trust agreement, with the trustee responsible for distributing funds as outlined in the trust. Since trust accounts are not considered part of the estate, they bypass probate.
Registered Accounts (RRSPs, TFSAs, etc.)
Registered accounts follow specific rules when the account holder passes away. If a beneficiary is named, the funds pass directly to the designated person, bypassing probate. However, if there is no named beneficiary, the funds become part of the estate and may be subject to probate and additional taxes.
The Role of the Executor or Estate Administrator
The executor (if there is a will) or estate administrator (if there is no will) is responsible for managing the deceased’s financial matters. To access bank accounts, they must provide a death certificate, proof of executor or administrator status (such as a grant of probate or letters of administration), and personal identification. Some banks allow limited early access to funds for funeral costs or estate expenses before probate, depending on the institution’s policies and provincial laws.
Provincial and Territorial Variations
Here are some variations to keep in mind for each province and territory.
Ontario
In Ontario, probate is not required for estates under $50,000, making it easier to handle small estates without going through a lengthy court process. Some banks allow a small portion of funds to be released before probate, particularly for funeral expenses. Executors should check with the financial institution handling the deceased’s account to determine specific requirements.
Quebec
Quebec operates under a different legal framework from the rest of Canada, as it follows civil law rather than common law. Joint accounts do not automatically transfer to the surviving account holder, and instead, the deceased’s portion of the account is treated as part of the estate. Notaries often handle estate settlements, and probate is not always required if the deceased had a notarial will.
British Columbia
British Columbia provides probate exemptions for small estates valued under $25,000, allowing a simplified process in some cases. The Wills, Estates, and Succession Act (WESA) governs estate distribution if there is no will. Executors should consult an estate lawyer or financial institution to determine whether probate is required for a particular estate.
Alberta
In Alberta, probate may not be necessary for small estates, as certain banks allow account transfers without formal probate if the estate value is below a set threshold. The Surrogate Court oversees estate administration and requires executors to apply for estate grants before accessing significant funds.
Saskatchewan
Saskatchewan provides a simplified probate process for small estates, although exact thresholds vary. Some banks allow early access to funds for funeral costs, but this depends on the institution’s internal policies. Executors should check with the deceased’s bank for specific details.
Manitoba
In Manitoba, the Public Guardian and Trustee may intervene if no executor is named to manage the estate. While probate is usually required, some exemptions exist for small estates. Executors should review provincial rules to determine whether probate is necessary for the estate they are handling.
Nova Scotia
Nova Scotia requires probate for most estates unless the estate is valued at less than $25,000. Small estates may qualify for a streamlined process. Banks often require court approval before releasing funds, so executors should expect delays if probate is needed.
New Brunswick
Probate is required in New Brunswick unless the estate qualifies as a small estate under provincial law. Some banks may allow early withdrawals for funeral expenses before probate is granted. Executors should contact the deceased’s financial institution to determine what options are available.
Prince Edward Island
Prince Edward Island provides a simplified process for small estates under $10,000. Banks may release funds to executors with proper documentation, but larger estates typically require full probate.
Newfoundland and Labrador
In Newfoundland and Labrador, joint accounts typically transfer to the surviving owner unless otherwise specified. The Public Trustee may step in to manage estates when no executor is named. Executors should consult the province’s estate rules to determine whether probate is required.
Yukon, Northwest Territories, and Nunavut
In the northern territories, small estates may avoid full probate depending on their value. If there is no appointed executor, the Public Trustee can intervene to ensure proper estate distribution. Executors should review each territory’s estate administration rules to determine the correct process.
Accessing Funds Before Probate
Most accounts remain frozen until probate is granted, but some banks allow early withdrawals for certain expenses. Executors may be able to access funds for funeral costs with proof of an invoice, estate administration expenses such as legal and executor fees, and immediate family needs in cases where the deceased was a primary provider. Policies vary by bank, so it is important to check with the financial institution handling the deceased’s account.
What Happens to Unclaimed Bank Accounts?
If no one claims a deceased person’s bank account, the bank holds the funds for a set period, typically 10 years. After this time, unclaimed money may be transferred to the Bank of Canada’s Unclaimed Balances Registry, where eligible heirs can search for and claim funds. The Bank of Canada provides an online tool to help locate unclaimed accounts.
Steps to Take if a Loved One Has Passed
Managing a deceased person’s finances can be overwhelming. The first step is to notify the bank as soon as possible to prevent unauthorized transactions and ensure proper estate handling. Gathering essential documents such as the death certificate and legal paperwork will be necessary to access funds. If the estate is complex, consulting an estate lawyer can help navigate legal requirements. Executors should also check whether the deceased had joint accounts or registered accounts with named beneficiaries, as these may bypass probate and be accessed sooner. Reviewing provincial probate requirements will help determine if the estate qualifies for simplified processing, potentially speeding up access to funds.
