We regularly hear of a client’s plan to stash some cash under the mattress or give money to a family member, prior to their passing to cover the funeral bill when they die.
This concern arises from the client’s view that the bank will freeze their account after they die.
While banks do freeze individual accounts to prevent misuse after a person’s death, they also understand certain costs can’t wait. Joint accounts are usually not frozen.
The executor or another family member may pay the funeral cost and get reimbursed from the estate but this option may not be appropriate as not everyone has $5 – $10k readily available to ‘lend’ the estate.
Presuming there is no pre-paid funeral or funeral bond, most banks release money from the deceased’s account (if there is enough money in the account) to pay for the funeral. The payment is usually made to the funeral director after receipt of a copy of the death certificate and the invoice.
With the right paperwork, banks generally cooperate with executors to ensure key expenses are paid without unnecessary delays.
Stashing cash under the mattress may result in a ‘windfall’ for an unintended person after you pass and it’s an unnecessary step to ensure the funeral invoice gets paid.