- Each bank sets its own process after a death, so ask yours what it requires in writing.
- Some assets, such as jointly owned accounts passing to a survivor and registered plans with a named beneficiary, generally pass outside the estate.
- When a person dies, the authority of anyone who dealt with Service Canada on their behalf ends, and the executor takes over.
- Government payments made after the month of death must be returned, so do not spend them.
A family member has died, you go to the bank, and the account is frozen. It feels harsh when bills, a funeral and household costs are arriving.
This article explains in plain terms why banks restrict accounts after a death, what usually releases the money, which assets may not be stuck at all, and what to avoid doing while you wait. Every bank has its own process, so treat this as a general guide.
Why banks freeze accounts after a death
A death changes who is entitled to deal with a person's money. What a bank does with the accounts after a death depends on its own policy. The aim is to protect the money for the people who are properly entitled to it, including creditors and beneficiaries.
Authority also changes at death. Someone who was authorized to deal with a government agency on the person's behalf loses that authority when the person dies, and the executor (the legal representative) takes over.
Whether a particular bank freezes everything, only some accounts, or allows limited payments depends on that bank's policy. Ask the bank what it requires in writing.
Which assets may not be frozen or may not be part of the estate
Not everything a person owned goes through the estate. Assets that generally pass outside the estate include insurance paid to a named beneficiary, jointly owned assets passing to the surviving owner, and RRSPs, RRIFs, TFSAs and registered pension plans that have a beneficiary designation.
By contrast, bank accounts the person owned are counted in the value of the estate. Insurance proceeds that are payable to the estate are counted as part of the estate as well.
| Type of asset | Generally part of the estate? |
|---|---|
| Account in the deceased's name alone | Yes, counted in estate value |
| Jointly owned asset passing to the surviving owner | Generally no |
| RRSP, RRIF, TFSA or pension with a beneficiary named | Generally no |
| Life insurance paid to a named beneficiary | Generally no |
| Life insurance payable to the estate | Yes |
How a particular joint account or plan is set up can be more complicated than it looks, so if you are unsure, ask a lawyer to review the account documents.
What usually releases the money
The exact list of documents varies by bank and by the size and type of account, so ask for it in writing.
Estate administration tax is nil on estates of $50,000 or less, although a return is still required, and above that it is $15 for every $1,000 (or part of $1,000) of value over $50,000, for certificates applied for on or after January 1, 2020.
For example, the Ministry's example is a $240,000 estate, which pays $2,850. Estate value includes assets the person owned at death, such as Ontario real estate (less mortgages and liens), bank accounts, investments and vehicles. Funeral costs, lawyer fees, loans, credit card debt and lines of credit cannot be deducted from the value for this tax.
A lawyer can tell you whether a certificate is likely to be needed for your estate.
Money coming in and out while accounts are restricted
Be careful with government payments. Service Canada asks to be told of the date of death as soon as possible. The estate is entitled to the CPP and OAS payments for the month of death. Payments issued after the month of death must be returned, and if they were deposited directly, the bank is asked to return deposits made after the date of death. If post-death payments have already been spent or withdrawn, they must be repaid.
Final wages and accrued vacation pay may also be owed by an employer. When employment ends, an employer must pay wages owing by the later of seven days after employment ends or the next pay day, and accrued vacation pay is payable when employment ends for any reason. Who receives that money and what the employer needs to see depends on your situation, so it is worth confirming with a lawyer.
- Before using the deceased's debit card or online banking for any reason, check with the bank or a lawyer. How this applies depends on your situation, so it is worth confirming first.
- Do not spend CPP or OAS deposits that arrive after the month of death.
- Keep every receipt for anything you pay out of your own pocket for the estate.
- Ask the bank whether any limited payments, such as to a funeral home, can be arranged. This depends entirely on the bank.
What to do next
Work through the practical steps in order, and ask for help sooner rather than later if the situation is not simple.
- Order several certified copies of the death certificate.
- Find out whether there is a will and who is named as executor.
- List every account and note whether it is joint, in one name, or has a named beneficiary.
- Notify Service Canada of the date of death.
- Ask each bank, in writing, what it needs to release funds.
- Speak with a lawyer if there is no will, the executor cannot act, or family members disagree.
If there is no will or no named executor, the rules that apply come from provincial law, and a lawyer can explain who may apply to act.
Frequently asked questions
Can I pay the funeral from the frozen account?
That depends on the bank. Ask the bank what it allows, and keep all receipts if you pay personally.
Is a joint account frozen too?
A jointly owned asset passing to the surviving owner generally passes outside the estate. Banks still have their own procedures, so ask what yours requires.
Do I always need an estate certificate?
Whether you need one depends on the bank and on your situation, so it is worth confirming with a lawyer. Ask the bank in writing what it requires for each account.
Do I pay estate administration tax on a small estate?
The tax is nil on estates of $50,000 or less, but a return is still required. The return is due within 180 calendar days after the estate certificate is issued, even if the value is $0.
Sources
- Ontario.ca – Estate administration tax — ontario.ca
- Canada.ca – Cancel CPP and OAS benefits after a death — canada.ca
- Canada.ca – Represent someone who died — canada.ca
- Ontario.ca – ESA Policy and Interpretation Manual, Part V — ontario.ca
- Ontario.ca – ESA Policy and Interpretation Manual, Part XI — ontario.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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