Estimated reading time: 16 minutes
There are things we know about death; however, finding out that you’ve been left with a frozen bank account is NOT something you want to know days after a funeral.
Discover what happens to a bank account after the death of a spouse. Learn how to handle a frozen bank account and avoid extra stress during a difficult time.
When dealing with the loss of a spouse, your life can be turned upside down mentally, physically, and financially.
Also this is especially true when you’re trying to use the money you have no right to access without following a process.
Today let’s talk about the process of a frozen bank account and how to avoid it.
Can You Pay The Bills If Your Spouse Leaves You With A Frozen Bank Account?
No one expects a financial officer to tell them that their late spouse will have a frozen bank account, including family savings.
It’s undoubtedly unnecessary to stress after death, but it is crucial to understand why and the implications.
This scenario happened recently to a CBB reader, which caused non-stop phone calls and chaos for weeks.
She hopes to inspire others to educate themselves about finances before death by sharing her situation.
Executor Status Means Red Tape
Even if you are named the executor in a WILL, you must jump through legal hoops to unfreeze the bank account.
Sadly, a frozen bank account happens quite often, according to the banking representative I chatted with on the phone.
However, this is especially true for couples who choose to bank separately for whatever reasons.
Since our bank accounts are not joint it gave us something to consider.
Funeral costs run into thousands of dollars, and without money, how will you pay for that funeral with a frozen bank account?
Related: How much a funeral costs in Canada
Luckily if you don’t rely on a savings account to pay your bills or funeral costs, you may have the time to wait out the process to unfreeze a frozen bank account.
A Frozen Bank Account Can Have Serious Implications
Most banks empathize with a family in this situation and are willing to help.
The family can begin this process by bringing the required documents, such as a notarized death certificate, personal Will, and funeral expenses.
I understand the bank has some authority with the money as they go through probate or lift and transfer names on a frozen bank account.
How to get a copy of an Ontario Death Certificate
“We didn’t have to worry so much about this as my father-in-laws funeral was being paid out of other savings.”
“Since my mother-in-law was retired and only earning a small amount of government pension the money in that savings account would be a huge help for her.”
Frozen Bank Account Put Pressure On Family Members
Until then, there was little cash for the funeral, which pressured the family to pay any upfront bills.
Related: Best Online Bank Accounts In Canada
Not many people keep thousands of dollars in liquid cash hanging around.
Someone still had to pay for funeral deposits, which aren’t cheap in Canada, running into tens of thousands.
Even though the family could have gone the route of having the bank step in with the funds, they decided to skip the paperwork.
Let’s say the bill we received was a shade under $40,000.
A simple funeral service can cost hundreds to thousands of dollars, depending on how posh or straightforward the funeral is.
In an upcoming post for this series, I will explain funeral costs and different types of funerals and burials.
What happens with a frozen bank account?
There is a simple answer: pretend your money is rock solid in an ice pit, and you can’t reach it without calling the big guys to help chisel it out.
It’s like dangling a steak in front of a dog because you can see the numbers in the bank account but can’t touch them.
It sounds a bit foolish, but going through the process of a frozen bank account can be a time-consuming process for anyone.
You typically don’t need a letter to unfreeze a bank account after the death of your spouse.
You need to go through a process that might see you in financial hardship if you are struggling for funds.
If a bank account is joint at the time of death, there will be a right of survivorship where the bank account won’t be frozen.
Under the income tax rules, each joint owner with a right of survivorship is presumed to havean equal interest/ownership inthe asset.– Advisor.ca
For this to happen, both of your names are on the bank account, and the surviving spouse continues to use the bank account.
You still need to declare the death of your spouse with the bank through the estate’s department.
However, if there is a bank account without joint ownership, it will be frozen.
The Will executor must get probate first before the account funds are released.
Understanding Probate
What is probate?
By planning, you want to ensure that your estate assets aren’t part of probate.
As explained to us by our estate lawyer, probate means a legal process of asset distribution of a person after death.
You can often avoid probate by naming a beneficiary, adding a Trust, and having jointly owned assets, including your bank account.
There is excellent Information online, such as this article, How to Avoid Probate In Canada, along with steps and photos.
Documents For The Bank When A Spouse Dies
What documents must you provide to the bank after a spouse dies?
Although this may differ for specific situations, this is the Information I’ve learned from our bank.
- Surrender his bank cards and credit cards with the specific bank only (you must cancel all other remaining credit cards in their name only, which is another process I will explain in another blog post.
- Proof of death, Notarized original death certificate
- Provide a copy of the Will
- Identification of the executor of the Will
Waiting for a frozen bank account to be released
Since the bank account was all cash, her family waited for the banking officer to sort out the estate paperwork and transfer the money.
Shockingly, the banker said it would take time as she had 100 other estate accounts she was working on.
I don’t suppose that is much fun when you require money sitting in a frozen bank account.
The good news for the family was that she had no idea there was a safety cushion of money he saved just in case something happened.
I suppose this was his emergency savings and her saving grace.
My mother-in-law was not the best with saving money which is why they had separate bank accounts.
The only access she had was to the joint chequing account to pay for bills each month.”
What I found interesting was that she did this old school by going into the bank and using a passbook or a cheque.
Her father-in-law would go into the bank and transfer funds to the joint account to pay for the mortgage and house insurance.
To think about the process of doing this every month seems awful, but that’s what was available.
Unfortunately, before technology took over the world, we had paper updates.
Couples need to discuss money, but things happen such as this because of one spouse’s misuse of funds.
Related: My spouse spends all of our money, help!
Naming Kids On A Joint Bank Account
Always read any updates your bank sends you to inform you of changes.
If you are one of the thousands of Canadians who owns an account jointly with your parent or your child, be aware that there is no longer an automatic right of survivorship on these accounts.
Though you may have been told by the bank when it was set up that there was a right of survivorship, the law has changed right across Canada.
An inter-generational joint account where the parent put in the money and later added a child as a joint owner is considered to be held in trust for the parent’s estate. That account will be frozen. – Source: Estate Law Canada Blog Spot
Whichever comes first, retirement or death, you must be prepared
Retirement is something that everyone in Canada should consider from a young age because it will happen whether you like it or not.
We know that when we no longer work or decide to retire, there needs to be an income flow to sustain living expenses, at least for budget basics.
Related: Why I want to retire early and a beginner’s guide
If you spend the rest of your years travelling or exploring our beautiful country in Canada, that will also require some extra money.
All this is fine and dandy, but don’t make mistakes that might land you in the land of the frozen bank account.
Private Bank Accounts
Over the past six years of blogging, I have heard why my readers choose to have their own bank account and forget the traditional joint bank account.
It is often for privacy reasons because couples want to spend and save their money as they see fit if they are unmarried.
The bills are split; however, the couple divides them, each paying their portion.
It seems like a solid plan, but it can get confusing whether you’re married or not.
How do I know?
We have been doing this since I moved to Canada from the UK, but our reasons are far different from the above.
Our situation revolved around building a credit history and credit score in Canada, which I have done but continued to bank partly independently.
Related: Why Simplii Financial Is The Best Online Bank Account
A separate bank account often continues even after a couple is married because they’re used to it or don’t want to change their budget and how they run their finances.
It probably just works for them, and change for many people is challenging, primarily when it revolves around money.
Estate planning is critical and something I will be talking more about on the blog as I create my Ultimate Guide For Estate Planning in Canada.
Obtaining Legal Advice Before Death
If you’re common-law or married, you may want to consider getting legal advice, including talking to your financial institution about how money gets allocated when one or the other dies.
Every bank will have an estate department that deals with death and living wills.
However, you can ask if you don’t want to make a special appointment with a banking representative.
I’d suggest sitting in with your banking officer and having a chat.
Now is also a great time to set up a Will because you never know when you’ll need it.
Some couples are in love but have no desire to marry yet want their assets to go to each other.
If this is the case, couples should document this Information in a Will, but that’s not all.
Consider your bank account frozen if you are not jointly named on the account.
Yes, that’s correct!
All the money in your wife or husband’s bank savings will no longer be accessible.
You’ll have to hang tight until the bank processes the Information needed to unfreeze the account.
Make The Financial Process Easy When You Die
In the meantime, we continue to research to prepare ourselves and our son if something should happen.
We wouldn’t want him to go through a frozen bank account as it can be physically and mentally exhausting.
We’ve since changed our bank accounts in light of what we have learned from this reader.
We’ve changed all our accounts to all joint bank accounts to avoid the above situations.
All it took was a simple phone call to our banking institution.
Stop Procrastinating- You Could Be Gone Tonight
Don’t wait for estate planning because a frozen bank account is money you have but don’t have.
Please do not take the above as legal or financial advice. Instead, talk to the professionals, as this is only a CBB reader story.
The Guide To Estate Settlement from The Bank of Montreal is a good read for Canadians.
Update: The Ultimate Guide To Planning Your Death- Executor Resource
Subscribe to CBB and get my free printable custom Emergency Binder with all of the information needed in the event of a death.
Discussion: Please share your experiences in the comment section below. Have you ever dealt with a frozen bank account in Canada?
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March Budget Update
Hey CBB Friends,
Our net income hovers around the same amount each month, which is neither good nor bad.
I’m so happy that I’m not doing the hours I used to, even though they paid off for me.
We made a few trips to play centres for our little guy, and daycare is going great.
Planning for his arrival into junior kindergarten might not be as challenging as we thought; however, I’m sure panic may set in once he sees the classroom.
Any tips from parents out there would be great! Perhaps I may create blog posts with all of your recommendations.
My allowance was over budget this month, all because of the beer. For some reason, likely stress, I’ve been drinking more beer, so I’ve cut that out until summer.
My allowance can’t take it, and luckily, Mrs. CBB pointed out that drinking isn’t going to calm the stress of everything. She’s right.
Have a great week, everyone!
Our FREE Simple Budgeting Series
Do you want to learn to budget as we do?
Please take the time to read through our budgeting series and Budgeting in the New Year.
I hope this information will help stop you from making common budgeting mistakes.
- How We Designed Our Budget Step 1–Gathering All the Information
- How We Designed Our Budget Step 2– Budget Categories
- How We Designed Our Budget Step 3–TrackingReceipts
- How We Designed Our Budget Step 4-Note-taking
- How We Designed Our Budget Step 5–5S Organization
- How We Designed Our Budget Step 6–Who Does What and When?
- How We Designed Our Budget Step 7–Balancing Our Budget
- How We Designed Our Budget Step 8–Knowing our Coupon Savings
- How We Designed Our Budget Step 9–Reading Our Bills
- How We Designed Our Budget Step 10–Projected Expenses
Budget Percentages March 2018
Our savings of 29.36% includes investments and projections for this month based on the income of $7174.23.
We put money away for the projected expenses that must be paid in the coming months.
The other categories were typical, even if the Life Ratio is slightly high and close to the maximum.
Budget Percentages Month By Month
Breaking Down Expenses
Below is a breakdown of our expenses, which helps us understand where our money goes.
Since May 2014, we’ve been mortgage-free, so much of our money in savings, investments, and renovations.
I appreciate that you enjoy this budget update each month.
Still, I hope you view this as an educational tool rather thancomparing your financial numbers,as our situations are unique.
Spending less than we earn and budgeting has been the easiest way to pay debt and save money. It may be different for you.
- Chequing– This is the bank account from which all of our debt gets paid.
- Emergency Savings Account– This is a high-interest savings account.
- Regular Savings Account– This savings account holds our projected expenses.
- Monthly Budgeted Total:$5,376.40
- Net IncomeTotal:$7,174.23
- (Check out our Ultimate Grocery Guide to see where our grocery money goes)
- Projected Expenses:These are expenses we know we will pay for throughout the year =$1,967.68
- Expenses Paid Out:$4,258.47
- Total Expenses Paid Out: Calculated is$7,174.23 (total net monthly income) – $1,967.68 (projected expenses) – $948.08 (savings into the emergency fund) = $4,258.47
- Actual Cash Savings going into Emergency Savings: Calculated is$7,174.23 (total monthly net income) – $4,250.47 (actual expenses paid out for the month) – $1967.68 (projected expenses) = $948.08
Budget Results
It’s time for the juicy category numbers to see how we made our monthly budget.
Below, you will see two tables: our monthly budget and the other is our actual budget for March 2018.
This budget represents two adults and a toddler plus retirement investments.
Budget colour chart
If highlighted in blue, that means it is a projected expense.
You will also see our budget does not include the emergency savings as it’s factored at the end.
Monthly Budget for March 2018
Actual budget expenses for March 2018
Budget updates month by month
You can read all of our monthly budget updates from 2012-Present.
- December 2017
- January 2018
- February 2018
That’s all for this month; check back at the beginning of April 2018 to see how we made out with our March budget.
Happy Budgeting CBB’ers!
- Tips For Opening A Joint Bank Account
- How To Calculate Monthly Grocery Costs
- 8 Costly Baking Ingredients To Stockpile
- The Best Way To Track Your Monthly Grocery Expenses (Free Printable)
- How To Create A Budget When You’re Broke
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