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Banking and Money

What Happens to Bank Accounts When Someone Dies

🏦 The first thing to know

When someone dies, their money does not simply disappear or become instantly available to the family. Their bank has a set process to follow, and knowing it in advance takes some of the stress out of a hard time. In short, once the bank is told, it freezes the accounts held in the person's own name so nothing can be spent that should not be, it stops automatic payments and direct debits, and it starts to work out who is entitled to the money. Some things keep moving: joint accounts usually pass straight to the surviving holder, and the bank will normally still pay the funeral bill and a few essential outgoings from the account. The size of the balance decides whether the family needs a grant of probate from the court before the money can be released. This guide walks through telling the bank, what happens to solo and joint accounts, the current probate threshold, what documents are needed, and how term deposits and KiwiSaver are handled, all checked against New Zealand sources. It is about the banking side. For the wider job of settling an estate, see our executor guide.

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Key Point: Telling the bank does not empty the account or lock the family out of everything. It freezes the solo accounts to protect the estate, but the bank will usually still pay the funeral invoice and joint accounts keep working for the surviving holder.

Telling the bank

The first practical step is to notify the bank. Any bank the person held accounts with needs to be told, and if they banked with more than one, each must be contacted. Most banks have a dedicated bereavement team and let you start the process by phone, online or in a branch. You do not usually need every document at this first contact, but the bank will ask for the person's details and, before releasing anything, will want to see proof of death.

What the bank usually asks for

  • Proof of death: a death certificate, or at the first stage sometimes a funeral director's notification, so the bank can update its records.
  • Who is dealing with the estate: the name of the executor named in the will, or the person applying to administer the estate if there is no will.
  • Identification: certified photo identification of the person dealing with the estate.

What happens the moment the bank is notified

Once the bank knows of the death, it takes several steps automatically to protect the estate and the family:

  1. Solo accounts are frozen. Accounts in the person's name alone are frozen to normal withdrawals, so money cannot be taken out until the bank confirms who is entitled to it.
  2. Direct debits and automatic payments stop. Regular payments set up on the account, such as subscriptions and instalments, are cancelled or suspended. Check for anything important that needs re-arranging in another name, such as insurance on a shared house.
  3. Cards are cancelled. Debit and credit cards on solo accounts stop working.
  4. Interest and statements continue. The account still earns any interest and the balance is held safely until the estate is settled.
💡 The bank will usually still pay the funeral

Even though a solo account is frozen to ordinary withdrawals, banks have a process to pay the funeral invoice directly to the funeral director from the deceased's account, and often a few other essential outgoings such as rates or a final power bill. This means the family does not have to fund the funeral out of their own pockets while the estate is being sorted. Ask the bereavement team how to submit the funeral invoice.

👥 Joint accounts, solo accounts and the probate threshold

Whether the money can be released quickly, or needs a court grant first, depends on two things: how the account was owned, and how much is in it. This is where families most often get stuck, so it pays to understand it.

Joint accounts pass by survivorship

If an account is held jointly, for example by a couple, it usually passes automatically to the surviving account holder or holders when one owner dies. This is called survivorship, and it means the account sits outside the estate. The bank does not freeze a joint account in the same way as a solo account, and the survivor does not need probate to keep using it. In practice the bank takes the deceased person's name off the account and it continues in the survivor's name, once they have seen the death certificate.

💡 Why couples often keep a joint account

Because a joint account keeps working for the survivor, many couples hold their everyday account jointly so day to day bills, and the funeral, can still be paid without waiting for the estate to be settled. It is one simple reason a shared account can help at a difficult time.

Solo accounts and the probate threshold

Accounts in the deceased person's sole name are frozen, and how the bank releases the money depends on the balance. For small amounts, the bank can pay the money out without a grant of probate, on production of the death certificate, the will, certified identification and a signed estate declaration or indemnity. For larger amounts, the bank needs a grant of probate (where there is a will) or letters of administration (where there is not) before it will release the funds.

Current rule: From 24 September 2025 the threshold rose from $15,000 to $40,000. The law now lets a bank release up to $40,000 held for a deceased person without a grant of probate. This was made by the Administration (Prescribed Amounts) Amendment Regulations 2025, changing sections 65(2) and (5) of the Administration Act 1969.
⚠️ Each bank sets its own limit, so check

The $40,000 figure is the maximum the law allows a bank to release without a grant, not a fixed rule every bank applies. Each bank sets its own policy limit up to that amount, and some will ask for a grant, or extra paperwork like an indemnity, at a lower figure. Above $40,000 a grant is generally required. Always ask the specific bank what it needs, because the practical threshold varies.

What documents the bank needs

Document Why the bank needs it
Death certificate Official proof of death, so the bank can act on the accounts
The will Shows who the executor is and confirms who is entitled to deal with the estate
Grant of probate or letters of administration Required above the threshold: the High Court's confirmation that the executor or administrator can act
Certified identification of the executor Confirms the identity of the person the bank is releasing money to
Estate declaration or indemnity For small balances released without probate, protects the bank if a claim later arises
💡 Real estate always needs a grant

The threshold is about money and similar holdings. If the person owned a house or land in their sole name, a grant of probate or administration is always required to deal with the title, no matter the value. Jointly owned property, by contrast, passes to the surviving owner by survivorship.

📄 Term deposits, KiwiSaver and other accounts

Bank customers often hold more than an everyday account. Term deposits, KiwiSaver and loans are each handled a little differently when the customer dies.

Term deposits

A term deposit locks money away for a fixed period, usually with a penalty if you break it early. When the holder dies, that changes. If the term deposit was in the deceased person's sole name, the bank will usually let the estate break it before the maturity date and, importantly, will normally waive the early break penalty and pay interest up to the date the deposit is closed. The money is then treated like any other solo balance, so whether probate is needed depends on the amount against the same threshold.

💡 You do not always have to break it

The estate can often choose to let a term deposit run to its maturity date instead of breaking it, if that suits the timing of settling the estate. Ask the bank about both options, since breaking early and running to maturity can produce different interest outcomes.

KiwiSaver

KiwiSaver is not held by the everyday bank in the same way as a savings account, and it cannot be paid to a beneficiary you nominate the way some overseas schemes can. When a member dies, their whole KiwiSaver balance is paid into their estate and then distributed under the will or the intestacy rules. The provider follows the same broad approach as a bank: for a smaller balance (up to the prescribed threshold, currently $40,000) it can usually release the funds without a grant, and above that the executor generally needs probate or letters of administration first. The executor should contact the KiwiSaver provider directly, so it helps if the will-maker recorded who their provider is.

Loans, mortgages and overdrafts

Debts do not die with the person. A loan, overdraft or credit card balance is a debt of the estate and is paid from the estate's assets before anything is distributed. A mortgage over a solely owned property has to be dealt with as part of settling that property. Where a debt was in joint names, the surviving borrower usually remains responsible for it, which is worth knowing before assuming a joint account is all upside.

⚠️ Do not keep using the deceased person's card or logins

Once someone dies, their solo accounts belong to the estate. Continuing to use their card, PIN or online banking, even for well meant purchases, is not allowed and can create real problems for the executor. Route everything through the bank's bereavement process instead.

💡 Deposits are protected too

Money held in New Zealand bank accounts and term deposits is covered by the Depositor Compensation Scheme, which protects up to $100,000 per depositor per licensed institution if that institution fails. A joint account is generally treated as each holder owning a share, so cover can apply to each of them. See our depositor compensation guide for the detail.

🔢 Worked New Zealand examples

These four examples show how the rules play out. The figures are illustrative, but the method follows the current law and common bank practice.

1
Meena keeps the joint accounts by survivorship

Situation: Ravi and Meena, a married couple, held a joint everyday account with $12,000 and a joint savings account with $48,000. Ravi dies. Meena wants to know what she can access.

How the joint accounts are treated

Joint everyday account: $12,000 passes to Meena by survivorship
Joint savings account: $48,000 passes to Meena by survivorship
Meena keeps all $60,000, and no probate is needed for the joint accounts

Meena shows the bank Ravi's death certificate, the bank removes his name, and the accounts continue in her name. Notice that the $48,000 joint savings passes to her even though it is above the $40,000 threshold, because survivorship applies before the threshold ever comes into play.

The lesson: The $40,000 probate threshold is about solo accounts. Joint accounts pass to the survivor outside the estate, regardless of the balance.
2
Margaret's small solo balance is released without probate

Situation: Margaret dies leaving a valid will. Her only bank asset is a savings account in her sole name holding $18,000. Her executor wants to release it without going to the High Court.

Testing the balance against the threshold

Sole account balance: $18,000
Threshold from 24 September 2025: $40,000
$18,000 is under $40,000, so the bank can usually release it without a grant of probate

The executor gives the bank the death certificate, the will, certified identification and a signed estate declaration or indemnity, and the bank pays out the $18,000. Under the old $15,000 threshold, this account would have needed probate. The 2025 increase means a simple estate like Margaret's can now be settled without the court step.

💡 Confirm the bank's own limit

Because each bank sets its own policy up to $40,000, the executor should still ask Margaret's bank what it needs for an $18,000 balance. Most will release it on the documents above, but the exact paperwork can vary.

3
David's larger account needs a grant of probate

Situation: David dies with a will naming his daughter as executor. He held $85,000 in a savings account in his sole name. His daughter asks the bank to release it.

Testing the balance against the threshold

Sole account balance: $85,000
Threshold from 24 September 2025: $40,000
$85,000 is above $40,000, so the bank requires a grant of probate before releasing the funds

David's daughter applies to the High Court for probate, which confirms the will is valid and that she can act as executor. Once she gives the bank the grant, along with the death certificate and her identification, the bank releases the $85,000 to the estate account. The account stays frozen in the meantime, though the bank can still pay the funeral invoice from it.

⚠️ Probate takes time, so plan for it

Applying for probate can take several weeks, and the money is not available until it is granted. This is why the funeral can be paid from the account directly, and why holding an everyday account jointly can make the first weeks easier for a surviving partner.

4
Paying the funeral bill from a frozen account

Situation: Aroha's mother dies with $30,000 in a savings account in her sole name. The account is frozen, but the funeral director issues an invoice for $9,500 and Aroha does not want to pay it herself.

How the bank handles the funeral invoice

Account balance (frozen to normal withdrawals): $30,000
Funeral invoice paid by the bank directly to the funeral director: $9,500
Remaining balance held for the estate: $30,000 - $9,500 = $20,500

Aroha gives the bank the funeral director's invoice and the death certificate. The bank pays the $9,500 straight to the funeral director from the account, even though it is frozen, and may also pay a small number of other essential outgoings. Because the $20,500 that remains is under $40,000, the executor can usually have the rest released without probate once the paperwork is provided.

The lesson: A frozen account is not a locked box. The funeral and essential bills can still be paid from it directly, which spares the family from covering those costs while the estate is settled.

Sources

Figures and rules in this guide were checked in July 2026 against the following official and primary sources:

  • Banking Ombudsman Scheme, "Deceased customers' accounts", "Freezing an account" and "Joint accounts" quick guides (bankomb.org.nz)
  • Ministry of Justice, "Increased probate threshold good news for bereaved families" ($15,000 to $40,000 from 24 September 2025, Administration (Prescribed Amounts) Amendment Regulations 2025), justice.govt.nz
  • Administration Act 1969, sections 65(2) and (5) (payments without probate), New Zealand Legislation (legislation.govt.nz)
  • Inland Revenue, "Getting my KiwiSaver savings for other reasons" and KiwiSaver payment on death rules (ird.govt.nz)
  • Reserve Bank of New Zealand, Depositor Compensation Scheme ($100,000 per depositor per institution), rbnz.govt.nz

Note: banks apply their own policies and paperwork within the law, so the exact threshold and documents can vary from bank to bank. Confirm the requirements with the specific bank, and treat probate figures as the position from 24 September 2025. This guide is general information, not legal advice.

Related tools and guides

🎯 Test Your Knowledge

Complete this 10-question quiz to check your understanding of what happens to bank accounts when someone dies

1. When the bank is told a customer has died, what happens to accounts held in their sole name?
They are closed and the money is sent to the government
They are frozen to normal withdrawals, and direct debits are stopped
Nothing changes until probate is granted
They are transferred to the next of kin immediately
2. What usually happens to a joint bank account when one holder dies?
It is frozen until probate is granted
It usually passes to the surviving account holder by survivorship
It is split equally among the deceased's children
It passes to the government
3. Even though a sole account is frozen, what will the bank usually still pay directly from it?
Any withdrawal the family requests
The funeral invoice and some essential outgoings
Nothing at all
Only the deceased's credit card balance
4. Since 24 September 2025, above what amount does a bank generally require a grant of probate to release a deceased person's funds?
$10,000
$15,000
$40,000
$100,000
5. What was the probate threshold before it rose on 24 September 2025?
$5,000
$15,000
$25,000
$40,000
6. Which documents does a bank typically need to release a deceased person's funds?
Only a verbal request from a relative
The death certificate, the will, and a grant of probate or administration if required
A social media post confirming the death
Just the deceased's bank card
7. What happens to a term deposit held only in the deceased person's name?
It is lost entirely
The bank can usually break it early without a penalty and pay interest to the closing date
It must run to maturity with no access at all
It automatically passes to the bank
8. What happens to a person's KiwiSaver balance when they die?
It is kept by the KiwiSaver provider
It is paid into their estate and distributed under the will or intestacy
It is paid to a nominated beneficiary chosen with the provider
It is paid straight to the government
9. Does the surviving holder of a joint account usually need probate to keep the funds?
Yes, always
No, survivorship passes the account outside the estate
Only if the balance is over $40,000
Yes, unless there is a will
10. Why does each bank's limit for releasing funds without probate vary?
Banks can ignore the law and pay any amount they like
$40,000 is the maximum allowed by law, but each bank sets its own policy limit up to that
There is no legal limit at all
The limit is set by the deceased's family

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