Accessing money of someone who has died

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Q. I’ve heard all sorts of horror stories about what banks and stockbrokers can do when the owner of an account dies, such as “sealing” the account, at least until the death certificate is presented. This prevents a successor trustee from accessing funds for burial expenses. What’s true for New Jersey, and what’s the best way to make sure my family can access my money?
— Planning ahead

A. This is a very important question to address while you’re still able to act.

Some of the steps may seem like overkill, but they’re meant to protect the deceased and their heirs — even if it adds some extra work for survivors.

When someone dies and has a personal investment account, a death certificate and letters testamentary are sent to notify the bank or brokerage firm of the death, and the account is frozen, said Frani Feit, a certified financial planner with Tradition Capital Management in Summit.

“An estate identification number is applied for by the executor and once received, the holdings in the individual account are transferred over to the estate account,” she said. “The executor can pay bills and make distributions from this estate account.”

If monies have been spent on final arrangements prior to the estate account being opened, individuals can be reimbursed from the estate account, Feit said.

“While this process may seem a bit cumbersome, it ensures that the deceased person’s wishes are being recognized and prevents just anyone from accessing the assets,” Feit said.

There are a number of ways to ensure assets will not be frozen — even temporarily — in order to give the survivors quicker access. A Transfer on Death (TOD) registration or Payable on Death (POD) account names a designated beneficiary on a personal account. The assets are not frozen, she said.

Also, if a revocable living trust has been created by the deceased individual, and if a successor trustee is named, the assets remain live and are distributed per the terms of the trust, she said.

IRA accounts are handled differently.

“The account is not frozen since IRAs operate on language contained in the beneficiary designation form,” she said. “The IRA holdings will be distributed as stated on this form which supersedes a will.”

You should also be aware of the rules for safety deposit boxes, which can differ state-to-state.

Feit said the current laws in New Jersey, which are in effect through Jan. 1, 2022, state there is no inventory required of a safety deposit box’s contents after death.

“Once the executor shows legal authority to open the box — death certificate, letters testamentary — the contents are distributed as part of the will,” she said.

Also make sure your powers of attorney and other documents are updated, otherwise some institutions won’t want to accept them.

Email your questions to moc.p1540232959leHye1540232959noMJN1540232959@ksA1540232959.