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Wednesday, May 24, 2017

You can't use your parents' bank accounts after they die. You just can't.

As thousands of Canadians are finding out each year, they cannot gain access to their parents' assets after the parents' death just because the parent allowed them access while they were alive. Parents need to make wills putting someone in charge and allowing someone access. A reader recently wrote to me sounding somewhat put out because the bank would not let her continue to pay bills after her mother died. Read on to see her note and my comments.

"My mother died without a will. There is no estate to speak of, just the money in her bank account (less than $3,000). I was handling things for her for seven years while she was in a nursing home. I find I am now blocked from using her account. I paid all the bills through her account (she had pension, CPP, and OAS) and now I'm blocked. I paid the final expenses from my own account since it seemed easier. How can I get reimbursed for the expenses from her account?"

Of course you cannot use her account. You are not her. It's not your money to use. People are always extremely surprised to find that places such as banks and land registries won't just let them take their parents' assets. Why would this surprise you? Your parents do not cease to be individuals with legal rights just because they have aged.

The fact that you helped her with her banking for years is great. Obviously she had someone she trusted to lean on when she needed help. However, that does not create any legal right for you to use her money after she has passed away. As you said, there is no will. That means that she has not appointed you as her executor. The bank has no legal authority to allow you access to her money.

If you had not already paid the funeral bill, I would suggest that you give the invoice to the bank and ask them to pay it from your mother's account. This is acceptable at pretty much every bank, assuming there is enough money in the account. However, you've already paid the bill yourself and the bank is not going to give you money directly for the reasons outlined above.

So let's look at the next option.

If the amount of money in the account was large, I would suggest that you or one of your siblings apply to the court to become the administrator of your mother's estate. However, given the size of the account, the cost of obtaining Letters of Administration would eat up the whole account. The banks have a process available for this type of situation.

If the bank account is the only asset your mother owned, the bank will not insist on probate (unless there is a dispute between siblings or something like that). All of you who are entitled to your mother's estate according to intestacy law in your province can sign an indemnity agreement at the bank. This is a form provided by the bank without you paying legal fees for it. It would need the signature of all beneficiaries and all would agree in writing to indemnify the bank from any future claims against the estate.

Because you had been handling your mother's finances for years, you would be a in a good position to determine whether she had any creditors who are likely to come forward, or whether there is an unpaid tax bill, or other financial trap waiting to spring.

Hopefully all of you can agree that the funds in the account would be used to pay final expenses first, and that would allow you to reimburse yourself from her account. If you disagree, there is nobody legally in charge of the estate to make the decision or settle the dispute.

You will have to realize that although this procedure will allow you to reach the short-term goal of reimbursing yourself, it will not give you the legal status of an executor or an administrator. The bank can get you to sign forms that allows you access to the assets over which they have control, but they can't do anything to help you with estate matters outside the bank. You may still have problems dealing with pensions or tax returns or other situations.


  1. Interesting because my sibling used our mother's bank account after she passed. Sibling paid for funeral costs etc. from the bank account. I am the Executor. Perhaps based on previous responses you sense that 'something is wrong in the state of Denmark' and why lawyer's (and a Judge at CMC (case management conference) are doing all they can to make me give up and accept their 'creative accounting' offer. No need, as I know exactly what the Estate is worth and where the monies are. I have a disability and that has made it doubly (or more) difficult for me to keep up. As stated, I have conducted myself accordingly...100%. I can say that I have never (relative to the estate) lied, fabricated, embellished, withheld, etc or misappropriated Estate Monies.

    1. You'll notice in the post I wrote that I talked about taking the funeral bill into the bank for payment. This is widely done by banks. They won't give any money to the kids, but they will pay for the funeral if there is enough in the account.


  2. That's a great example for people who say, "I don't need a will because I really don't have anything." If they have expenses, they have income, and accounts and possible benefits or liabilities. Get that Will in place and a competent executor named!

    1. A will is not only for assigning the things a person owns after death. More importantly, a will is to appoint a known and trusted person as the Executor. Regardless of the value of the estate, in addition to dealing with burial/cremation, a person's final tax return must be prepared and their life 'concluded' from a legal standpoint.

      If there is no will, then there is no executor so the court will need to become involved to appoint an administrator. Depending on the value of the estate on DOD, much of that will likely be consumed in legal expenses and probate which may have been saved if there had been a properly prepared will document in place.

      As Lynne previously mentioned, a person not having a will, or having an inadequate will, is leaving a mine field and creates unnecessary stress for that person's remaining relations.


    2. Absolutely. The person who says "I don't need a will because I don't have anything" is just rationalizing his own laziness or reluctance to spend any money.


  3. People procrastinate, that we know for sure, and in in many areas of their lives. One thing about 'wills' is that many people really don't understand the importance of them. If these people read some of the Estate Horrors out there, they might think differently. I know someone out West that has been procrastinating for some time . I have been sending some of the Horror Stories from this blog along with my Estate Horror. He has taken steps to get it done. Also, some people's lives have gotten rather complicated and that can be a reason why it does not get done, such as my friend out west. A thought. Before putting someone's name in your will, please discuss it with them first. They might not want to be an Executor once they know it is often a thankless job. If you love and care for the people in your life....GET IT DONE.

    1. I talked to an older woman on the phone today who called to ask about wills. She is also trying to pre-arrange her funeral and deal with an RDSP for her disabled son. She told me that she was just overwhelmed and didn't know where to start. I think that feeling of being overwhelmed stops a lot of people from moving forward.

      Getting a really good advisor, whether it's an estate lawyer or a great financial advisor, can make all the difference because that advisor will help you prioritize and organize and take the right steps.

      You are absolutely right about discussing executorship with the person you want to name. They don't have to do it, so you could be naming someone who's just going to renounce and leave you with nobody.


  4. Mediation. Lynne, you touched on this some time ago. This was never mentioned by anyone 11 years ago. Back then I knew considerably less then what I know now. Also, I did not anticipate any problems. It was a simple Estate with 2 siblings named in the will.
    Considering what I have been going through, and what the system does to you, I highly recommend going that route. This has greatly affected my life. Mediation is a two way street. If one party has something to hide, or does not want to work it out, come to a fair agreement/arrangement then chances are mediation comes to a dead end. Lawyers and others should encourage mediation, for all the many reasons.
    I have previously mentioned CMC (Case Management Conference).
    CMC was sprung on me without any discussion. I was not aware of it and there was no discussion. It was pure deception by my lawyer and the deck was stacked. The same Judge later presided to get my lawyer 'off the record'. This IMO should not happen. The Judge was not interested in anything I had presented. I had a very good presentation. My lawyer had none. My lawyer had arranged a 15 Minute oral. Note-I have a chronic back disability. The Judge actually blamed me for advancing this to Trial, and that all the Estate monies would be spent on legal fees.
    There are many more estate horror stories out there that don't get any attention. Most people named in wills just want what is due them. They don't raise much of a fuss.


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