When a loved one passes away, families often face more than just emotional loss—they are frequently met with unexpected financial and legal challenges. One of the most common complications arises when bank accounts haven’t been properly structured in advance. In Texas, estate and probate laws can result in frozen accounts, delayed distributions, and added stress if account ownership or beneficiary designations aren’t clearly defined.

Fortunately, proper estate planning can prevent these issues. This article outlines the most common problems with bank accounts after death in Texas, how those problems can be resolved, and the proactive steps you can take now to protect your family’s financial well-being.

Common Issues with Bank Accounts After Death

Joint Accounts vs. Individual Accounts

Many people mistakenly believe that a surviving spouse or child will automatically gain access to a deceased person’s bank account. However, access depends entirely on how the account was established. In Texas, joint accounts that include rights of survivorship allow the surviving account holder to take immediate ownership of the funds. Without this specific legal designation, even a joint account may be subject to probate.

This becomes especially problematic when the spouse or child is not listed as a joint owner, when there is no survivorship agreement on file with the bank, or when the account is titled solely in the deceased’s name. In these cases, banks typically freeze the account upon receiving notice of the death, and access cannot be granted until probate proceedings are underway and legal authority is confirmed.

Beneficiary Designations

A payable-on-death (POD) designation is another way to ensure that funds are transferred directly to a beneficiary after death. Many banks offer this feature, which allows the account holder to name someone to receive the funds automatically when they pass away. However, this method is only effective if the information is accurate and up to date.

Problems often occur when no beneficiary is named, when the information is outdated (such as listing an ex-spouse), or when the bank’s records contradict the instructions in the will. Because POD designations take precedence over what’s written in a will, any mistake can result in assets going to the wrong person or disputes among surviving family members.

Bank Policies and Probate

Once a bank is formally notified of a customer’s death, its policy is generally to freeze the account unless there is a surviving joint owner with rights of survivorship or a valid POD beneficiary. In the absence of either, the account becomes part of the decedent’s probate estate.

To access those funds, the estate’s representative must go through the Texas probate process. This process can be time-consuming and complicated, particularly when the deceased did not leave a will, when heirs disagree about how assets should be distributed, or when disputes arise regarding who should serve as the estate’s executor or administrator.

How to Resolve Bank Account Issues After Death

Presenting a Death Certificate

The first step in handling a deceased person’s bank account is to present a certified copy of the death certificate to the financial institution. This action usually triggers the account freeze if no survivorship or POD arrangements exist. The bank will then require proof of legal authority—typically Letters Testamentary or Letters of Administration—before releasing any information or funds.

Only individuals with proper legal standing can receive account access. Anyone who is not a joint owner or named beneficiary will be denied, and the family will need to work through the probate court for further action.

Legal Help and the Probate Process

When families encounter frozen accounts, delays, or disputes, it is important to contact a Texas estate and probate attorney. An experienced lawyer can help file the probate case, secure court-issued legal authority, and communicate with banks and other financial institutions on the estate’s behalf.

Legal counsel is also essential when navigating disputes among heirs, resolving questions about asset ownership, or expediting access to funds for funeral expenses or urgent bills. In some cases, tools such as small estate affidavits or emergency court motions may be available to accelerate access to essential funds.

For estates involving real estate, business interests, or substantial investment accounts, legal assistance is critical to avoiding costly mistakes or further delays.

How to Prevent Bank Account Pitfalls

Set Up Joint Accounts Properly

Joint accounts with rights of survivorship are a convenient way to ensure funds remain accessible to family members after death. However, this benefit only applies if the survivorship designation is formally recognized by the bank.

Account holders should confirm with their bank that the survivorship arrangement is clearly documented and legally enforceable. Written confirmation should be requested and reviewed to ensure it aligns with the individual’s broader estate plan.

Keep Beneficiary Designations Up to Date

Bank accounts with POD designations should be reviewed on a regular basis—at least annually—and updated any time major life changes occur. Marriage, divorce, the birth or adoption of a child, or the death of a named beneficiary all require prompt updates to ensure the correct person receives the funds.

Failing to update a beneficiary can result in the money passing to someone unintended, such as a former spouse or a deceased relative’s estate.

Communicate Clearly with Banks

Account holders should take time to speak directly with their bank or financial institution to verify how their accounts are titled. It’s important to ask who is listed as the account owner, whether the account includes survivorship rights, and who is designated as the POD beneficiary.

Request written confirmation of all ownership and beneficiary arrangements. If the existing account setup does not match your current wishes or estate plan, request and complete the appropriate forms to make necessary changes.

Frequently Asked Questions (FAQ)

What happens if there’s no joint owner or POD beneficiary on a Texas bank account?

If there is no joint owner or named beneficiary, the account becomes part of the deceased person’s probate estate. The bank will freeze the account until the court grants an executor or administrator legal authority to manage and distribute the assets.

Can families use bank funds for funeral expenses before probate?

Generally, no. Most banks require a court order before releasing funds, even for funeral costs. However, families can later request reimbursement from the estate once probate begins.

How long does probate take in Texas?

The probate process can take several months to over a year, depending on the estate’s size and complexity. For smaller estates, a small estate affidavit may be used to speed up the process.

Are funds transferred through survivorship or POD subject to taxes?

While these transfers bypass probate, they may still be subject to income or estate taxes depending on the total value of the estate and the recipient’s relationship to the deceased. Tax planning should be reviewed with a qualified professional.

Where Do We Go From Here?

Bank account complications after death are a common part of estate administration in Texas, but they are often preventable. By taking the time to verify account ownership, update beneficiary designations, and ensure your accounts reflect your broader estate plan, you can protect your loved ones from unnecessary delays and stress.

The key takeaway is simple: don’t wait. Consulting with an experienced Texas estate planning attorney can give you the peace of mind that your financial accounts are set up correctly and legally enforceable.

Need Help? Texas Estate and Probate Lawyers are here to assist. We offer personalized account reviews and comprehensive estate planning services tailored to your needs.