Accessing a deceased bank account, knowing that the bank account owner is already dead, is illegal and can be considered theft or fraud, depending on the circumstances.
When a person dies, banks freeze their accounts and generally do not allow third parties access to the bank account until proof is shown by the person seeking access to the bank account that the court has issued him letters testamentary or of administration.
However, there are instances when the bank account is on auto-debit for certain items like utilities, subscriptions, and mortgage payments. There is no fraud in debiting the account for these items, especially when they have not received any proof that the bank account owner is dead.
When a family member or an individual who has access to the bank account of a deceased person (either via credit card, debit card, or online access) continues to use and withdraw funds from such bank account, knowing that the owner is dead, this can be considered theft or fraud. The proper procedure is to inform the bank of the owner’s death and to apply for a court order as executor or administrator to access the account, if the account is solely owned by the deceased with no payable on death designation, and to use the money in the account to pay off creditors, and thereafter, distribute to the proceeds to the beneficiaries or distributees.
The penalty for accessing a deceased bank account can be significant. The court can discharge the executor and replace them with someone else, force them to return the money and take away their commissions. There can also be criminal a penalty, but most estate theft allegations do not escalate to criminal prosecution.
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Turnover. Beneficiaries of the deceased person’s estate can bring a proceeding for Discovery and Turnover. If the court grants the turnover, then it will force the executor to return property that he wrongfully transferred.
Discharge of executor. If the person caught accessing a deceased bank account is the executor or administrator, the judge of the Surrogate’s Court can discharge them from their position, taking away their power to manage the estate. The judge can discharge and remove the executor “by reason of his having wasted or improperly applied the assets of the estate.” The court can appoint someone else as the executor instead, typically one of the beneficiaries who brought the proceeding to remove the misbehaving executor.
Attorneys’ fees. Executors use estate funds for their defense. If the court finds that the executor improperly took funds from the estate, the court can order the executor to reimburse the estate for their attorneys’ fees. In some rare cases, the court can even order the executor to pay the beneficiaries’ attorneys’ fees.
Waiver of commission. An executor is entitled to a commission for their services. The amount of the commission is about three percent of the value of the estate. As a penalty for accessing a deceased bank account, the court can take away the executor’s right to receive the commission.
A person improperly accessing a deceased bank account can be subject to criminal prosecution for theft from the bank account, even if they are one of the of the beneficiaries of the dead person’s estate. Taking more than you are entitled to by law can be interpreted as stealing from the other beneficiaries of the estate. Everyone has their side of the story, and it could be that the beneficiaries’ allegations of theft are unfounded. But if the District Attorney’s office decides to bring charges, then the potential penalties can be significant.
The alleged thief’s side of the story. Executors or others who are accused of stealing have their own side of the story. They say that they are paying for estate expenses, taking their legal fees, taking their share as a beneficiary, or comingling funds by mistake. Whether the executor is caught stealing and is now making an excuse or the executor did have a valid reason to transfer estate property to themselves is up to the court to decide, unless the executor makes a plea agreement with the District Attorney’s office.
The Penal Law. The estate is the owner of the property. When a person is accessing a deceased bank account, they are possibly committing larceny. New York’s Penal Law (the Criminal Law) states that “A person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof.”  New York Penal Law continues to say that “Larceny includes a wrongful taking, obtaining or withholding of another’s property, with the intent prescribed in subdivision one of this section, committed … by conduct heretofore defined or known as common law larceny by trespassory taking, common-law larceny by trick, embezzlement, or obtaining property by false pretenses.” 
Sentencing guidelines. New York Penal Law 155 describes the sentencing guidelines for someone accessing a deceased bank account. The sentence depends on the amount that the executor steals. An executor convicted of larceny can incur a sentence of up to twenty-five years in prison.
|Amount Stolen||Type of Grand Larceny||Section of Penal Code||Felony Class||Penalty|
|In excess of $1,000 but not more than $3,000||Fourth Degree||PL 155.30(1)||Class E Felony||up to 4 years in prison|
|In excess of $3,000 but not greater than $50,000||Third Degree||PL 155.35||Class D Felony||up to 7 years in prison|
|In excess of $50,000 but is not more than $1 million||Second Degree||PL 155.40(1)||Class C Felony||up to 15 years in prison|
|In excess of $1 million||First Degree||PL 155.42||Class B Felony||up to 25 years in prison|
Restitution. The court can force the executor to return the property to the estate and pay restitution to the beneficiaries.
For example, Mother and Father are spouses. They two children, Son and Daughter. Father had $100,000 in the bank when he died with no debts. The bank account was solely in Father’s name and did not designate any payable-on-death beneficiary nor was it a trust account. Mother, however, had Father’s debit card. Father died on April 1, 2021, but Mother did not inform the bank of Father’s death, and continued using the debit card until April 30, 2021, buying a car, clothes, and make-up. As of April 30, 2021, Father’s bank account only had $5,000 left. Mother then informed the bank of Father’s death. Father died without a will. Mother applied to be the administrator of Father’s estate, and since the net estate was less than $5,000, Mother received everything, leaving nothing for her children.
Generally, it is the personal representative of the estate who has the right to file a case against a person who takes money out of a deceased bank account. In this case, since Mother is the personal representative and she is also the one who took money out of the deceased bank account, the children can object to her accounting and surcharge her the amount due to the children. If the value of Father’s net estate is $100,000, Mother should have been entitled to $75,000 under EPTL § 4-1.1, while the three children were entitled to $25,000, divided equally among them. Mother would have to pay her children this amount.
Assuming the same facts above, but in this case, it was Father’s secretary in his business, Sarah, who took money out of the deceased bank account and used it for her personal activities, Mother, as administrator, can file an action for theft against Sarah.
Assuming again the same facts above, but in this case, Mother did not access the deceased bank account, but instead used Father’s credit card after his death. In this case, the bank has a cause of action against Mother for credit card fraud if Mother fails to pay Father’s credit card debt.
Assuming the same facts above, but this time, Father’s bank account had a payable-on-death designation, nominating his daughter, Daughter, as his sole beneficiary, then Daughter has a cause of action against Mother for theft because it was Daughter who was completely entitled to the bank account upon Father’s death.
Lastly, assuming the same facts above, but this time, Mother was a joint owner of the bank account, then Mother’s acts of accessing the deceased bank account is not illegal. As a joint owner, Mother had ownership over the bank account even after the death of Father because joint owners usually have survivorship rights where the death of one owner automatically vests to the joint owner the entire property.
Accessing a deceased bank account is illegal. The person who has a cause of action against the person taking the money would depend on the circumstances of the case. If money has been taken from your deceased loved one’s bank account, immediately seek legal counsel to know your remedies in how to get the money back. We, at the law offices of Albert Goodwin, are here for you. We are located in New York, NY. You can call us at 718-509-9774 or send us an email at [email protected].