How Does One Avoid Frozen Bank Accounts After Death?

September 4, 2017

There are many reasons you want to avoid frozen bank accounts after death.

  • You may well have life cover in place, but it might not cover your financial needs
  • Some states, depending on complications, can take months or years to wind up
  • Add an immediate needs benefit in your policy that can at least pay out a sum immediately after death and presentation of the death certificate
  • If customers are expecting deposits, alert your bank before time to avoid frozen bank accounts
  • Remember to consistently update your personal information with the banks. To avoid having them frozen – this is for your own sake to avoid money laundering and corruption
  • A death in the family could mean bank accounts belonging to the deceased are frozen. This is usually till the financial affairs of the estate are settled.

 

Estates can Take Months or Years to Wrap Up – Frozen Bank Accounts

Estates can sometimes take ages to wind up and in the meantime, you’ve got to find the money from somewhere to pay for bills, your bond, and maybe even the funeral.

Naturally, you’ll want to know how you can guard against this. When a family member dies, it is a traditional procedure that bank accounts of the deceased are frozen – this will be until all the affairs of the estate are settled.

When listing a beneficiary, make sure that they receive any benefits directly without having to go through the deceased estate process. If you don’t complete a session on your life insurance application. For instance, the proceeds of a claim will be payable to the estate. Make sure your will is clear on where these proceeds should be allocated to.

Cash Flow Problems for the Surviving Family – Frozen Bank Accounts

Frozen Bank AccountsYou’ll want to make provision for your family once you die when your bank accounts are frozen by the bank. The bank will still receive monies into your account, but it won’t pay anything out. The Executor opens a new bank account in the name of the deceased and once this new bank account is open, the Executor closes all bank accounts and transfers the money to this new account.

 

The Master will approve the paying out of this money.  This can take time and could spell a time of cash problems for your family. There are, however, certain circumstances where monies can be made available to the immediate family.

An Immediate Needs Benefit can be Helpful – Frozen Bank Accounts

So what else can you do to prevent a frozen bank account? Chris de Klerk, a corporate actuary, reckons you should think about an immediate needs benefit as part of a policy. Once you’ve got a death certificate and have presented it, within 2 working days you’ll get up to R50 000. The amount will be subtracted from the total amount of life cover eventually paid out.
Just take note, however, that some insurers won’t pay out on a life insurance claim if the policyholder was killed taking part in extreme activities. Always read the terms and conditions about frozen bank accounts and life insurance policies and make sure you understand how they work and what possible exclusions there are.

Always be Updating your Details for a Smoother After-Death Process

Also, ensure that you do financial planning with the Fiduciary Institute of South Africa which will include drafting a will and making sure that it is up to date.

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All info was correct at time of publishing