What Happens to a Deceased Person's Bank Accounts and Debts in BC

When someone dies, families often worry about two things at once: getting at the money to pay urgent bills, and being left with the person's debts. The rules in British Columbia put the estate, not the family as a group, at the centre of both questions.

This article explains who deals with the accounts, what banks tend to ask for, how debts are generally paid, and where funeral costs fit in. Your situation may differ, especially for joint accounts, so a lawyer can confirm how the rules apply to you.

This article covers the law of British Columbia.

Who deals with the bank accounts

A will may name an executor. If there is no will, a person can apply to handle the estate as an administrator.

A personal representative has the same authority over the estate as the deceased would have if living, unless the will says otherwise or an enactment limits it. That authority extends to accounts held by third parties such as banks, although the terms of service of those institutions may still apply.

Other relatives, even close ones, do not automatically have the right to take money out of the deceased's accounts. Until someone has authority, it is usually best to keep records and not move money.

What banks usually ask for

Institutions set their own rules on whether probate is required before they release assets or close accounts. Some require a grant of probate and others do not.

Because practices differ, call each bank or credit union and ask what it needs. Common items to gather include:

• A death certificate, which is proof of death; some services require a certified copy.
• The will, if there is one, and a record of who the executor is.
• Identification for the person asking to act.

Joint accounts and accounts with a named beneficiary can work differently from accounts held in the deceased's name alone. Whether such an account passes outside the estate depends on how it was set up and on the institution's terms, so confirm this with the bank and a lawyer before assuming either way.

Do relatives have to repay the debts?

Generally, debts are dealt with through the estate. The personal representative must administer and distribute the estate and account to beneficiaries and creditors. Paying valid debts and cancelling charge cards are among the executor duties the Province lists.

The person at risk is usually the one running the estate. Executors and administrators may be held personally liable for valid debts of the estate if they remain unpaid after the estate is distributed. That is why it matters to identify debts before handing out anything to beneficiaries.

Whether a particular relative is responsible for a particular debt can also depend on whether they co-signed, guaranteed or jointly held it. That depends on the loan terms, so confirm it with a lawyer.

• If the estate cannot pay everything (an insolvent estate), reasonable funeral and other expenses incurred by the personal representative are paid first, ahead of the representative's compensation, legal expenses, wages and other claims.
• That priority order applies only to insolvent estates. Claims in the same class rank equally and are paid rateably when funds are insufficient, and secured creditors' rights are unaffected.
• Where there is no will, funeral and administration expenses are deducted when calculating the net value of the estate before the spouse and descendant shares are worked out.

Funeral costs and help paying them

Who owes the funeral home depends mainly on the contract signed with it, since the statute on control of remains does not itself assign liability for funeral costs. A lawyer can help if you are unsure what you agreed to.

BC's Burial or Cremation Supplement is available when the deceased's estate and the responsible person cannot pay the full cost. It is not limited to people who received income assistance. Ministry preapproval is required before burial or cremation services are provided, and payment goes directly to the funeral provider.

The ministry's policy says a legal representative is generally not liable for the costs unless also the responsible person. It begins cost recovery from the estate, including bank accounts, RRSP/RDSP, CPP death benefit and insurance, whenever possible. The responsible person may include a spouse, or a parent if the deceased was a minor.

What to do next

• Find out who is the executor, or whether someone needs to apply to be administrator.
• Notify Service Canada as soon as possible to cancel CPP and OAS; all payments issued after the month of death must be returned.
• For direct deposits, ask the bank to return them to the originator, or send a Canadian-funds cheque payable to the Receiver General for Canada.
• Contact both Equifax and TransUnion to report the death and reduce fraud risk.
• List all assets and debts before any distribution. The personal representative must not distribute the estate within 210 days after the representation grant is issued except by court order, although distribution is allowed with the consent of beneficiaries or intestate successors.

If the debts look larger than the assets, speak with a lawyer before paying creditors or distributing anything.

Frequently asked questions