Readers questions: What happens to the bank account when a private limited company owner dies?
Expert answer: The expert for this question is Simon Thomas the MD at Ridgefield Consulting.
For a business to continue running once the limited company owner/director dies, everyday transactions need to continue. However, the bank accounts both personally for the director as well as their company bank accounts will be frozen once the banks have been notified by the executor or administrator of the director’s estate. The result of this is that any usual outgoing transactions such as for payroll and direct debits such as for utilities, office rental or hire vehicles will all stop.
How do you gain access to the company bank accounts?
To gain access to the bank account, the estate executor will have to wait until they are granted probate. If the deceased has a will, the executor or administrator will have to apply for a Grant of Probate. The grant is a legal document that confirms that the executor can deal with the deceased person’s assets such as money, property and belongings.
If the deceased does not have a will, the estate will be automatically distributed according to inheritance laws. Whoever is due to receive the estate will still need to apply for a Grant of Probate before being able to access the company bank accounts.
What happens once probate has been granted?
On average it can take between three to six months for a Grant of Probate to be issued. This is not a guarantee however, and significant amounts of time should be expected before being able to access the deceased’s assets and belongings.
Once probate has been awarded however, the executor will need to provide this document to the banks. They will then be permitted to withdraw money and will need to distribute according to the will if there is one. Where there is no will, whoever becomes the executor as a result of inheritance law will become responsible for the deceased’s unfinished affairs such as paying for any debts owed as well as closing the bank account.
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