Can a co-signer close a decedent’s bank account and use its funds before establishing an estate account in North Carolina?
1. Detailed Answer
When someone dies in North Carolina, assets in their name pass into a formal estate. Bank accounts held solely by the decedent become estate property. A co-signer or joint account holder does not automatically gain full control over those funds. State law protects estate assets and requires proper administration before anyone can withdraw or distribute money.
Why a co-signer can’t withdraw funds immediately
Under North Carolina law, only an appointed personal representative (executor or administrator) may access estate assets. A co-signer who acts before that appointment risks personal liability. N.C. Gen. Stat. § 28A-13-1(a) makes clear that no one may transfer or distribute estate property until the clerk of superior court issues letters testamentary or letters of administration. Without letters, the co-signer holds no legal authority to close the account or spend the money.
Appointment of a personal representative
To begin probate, an interested person files a petition in the clerk’s office. The clerk reviews the will (if any) and issues letters testamentary or letters of administration. Those letters grant the holder the power to collect assets, pay debts, and distribute inheritances (N.C. Gen. Stat. § 28A-13-1).
Handling of estate funds
Once appointed, the personal representative must open a dedicated estate account. North Carolina law requires deposit of all estate funds into that account to keep personal and estate assets separate. Mixing estate funds with personal accounts can lead to court sanctions and personal liability (N.C. Gen. Stat. § 28A-15-2).
Consequences of improper withdrawals
If someone other than the personal representative withdraws funds, they can face a surcharge. The court may order them to return the money plus interest. In extreme cases, a co-signer who drains account funds may be removed from any future role in the estate.
Exceptions and bank policies
Some banks close accounts automatically when notified of a death. However, they typically freeze the balance until the estate provides a certified death certificate and letters of appointment. If a co-signer persuades a bank to release funds, the co-signer may bear personal responsibility for repaying the estate.
2. Key Points to Remember
- Decedent’s sole accounts become estate property upon death.
- Only a court-appointed personal representative may legally close estate accounts or withdraw funds.
- Petition for probate and obtain letters testamentary or letters of administration (N.C. Gen. Stat. § 28A-13-1).
- Open a separate estate bank account; never co-mingle personal and estate funds (N.C. Gen. Stat. § 28A-15-2).
- Improper withdrawals can trigger court-ordered surcharges and removal from estate administration.
- Seek legal guidance early to protect assets and avoid personal liability.
Conclusion & Next Steps
Withdrawing decedent funds without proper authority can expose a co-signer to personal liability and jeopardize estate administration. To ensure compliance with North Carolina probate law and protect all parties, work with an experienced probate attorney. Our team at Pierce Law Group helps families navigate these rules and secure proper court appointments. Contact us today for clear guidance.
Email us at intake@piercelaw.com or call (919) 341-7055 to schedule a consultation.
