Nicole helps ... sort out the bank accounts when a spouse dies

Dear Nicole,

My wife Christine, aka Chris, and I are septuagenarians who hope to eventually receive a telegram (or equivalent) from whoever’s on the British throne but in case we don’t live that long it’s important that we educate ourselves on the final preparations. We’re amazed at how most people seem to be nonchalant about such matters (years ago we placed our wills and powers of attorney and other documents in a security envelope and gave the details to various relatives, who apparently didn’t keep them). When I was a teenage teller, it was bank custom to scan newspaper obituary columns but I don’t know what procedures they use these days before freezing accounts. Also I am trying to understand how funeral parlours go about getting paid from such individual accounts of deceased people. Chris and I have individual bank accounts but none in joint names. If we open a joint one for emergencies (with either to sign) what restrictions would be placed on withdrawals in the event of one of us dying?

Regards, Lindsay

Funerals are one of the few expenses banks will consider releasing money for, ahead of probate.

Lindsay, this is confronting stuff… why people don’t usually like to deal with or even think about it. Well done on your – hopefully extremely early! – pro-activity.

I suspect you saw my recent column, sharing my mother-in-law’s difficult administrative time on my father-in-law’s unexpected death. There’s also a nice, simple check list to help prepare, on moneysmart.gov.au.

Meanwhile a joint bank account would solve the timing issue, where money necessary to pay for a funeral might be locked up in an account only the deceased can access. (As an aside, I would point you to an excellent recent Money cover story that explains funerals can be far more economical than most of us realise. Indeed, we laid my wonderful father-in-law to rest in perfect personal style, by engaging an $1150 cremation-only service and skipping an albeit sympathetic stranger acting as funeral director.)

You can open a joint bank account on a "both to sign" basis – yes, where two signatures are required to get at the contents – or an "either to sign" basis. The latter is entirely appropriate in trusting partnerships where money needs to be shared (even if just for bills). It will also continue, with no restrictions on withdrawals, should one person die.

Where accounts are in individual names, some banks do say that funeral expenses are the one thing they’ll consider releasing money for, ahead of the estate being finalised. But a surviving spouse probably doesn’t need this extra grief.

Bear in mind that bank accounts and credit cards are only cancelled once a death certificate is procured and crucially presented. Though the guidelines differ by bank, there will be a grace period…

Write to Nicole for help solving your money problem, or with a consumer question, at nicolehelps@fairfaxmedia.com.au.

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