Italian estate management: how to close a bank account when someone dies

Closing a testator’s bank account is a delicate phase of estate management following their death, during which the heirs are requested to interact with the bank in a coordinated manner complying with the local probate rules. In Italy, this process is governed by Italian inheritance laws, which aim to ensure the proper liquidation and distribution of the deceased’s assets between the legitimate heirs and legatees.

This guide written by our Italian estate management lawyers explores how to close a bank account when someone dies, the cases in which it does not fall under succession, and how the inheritance is divided among the beneficiaries. It also covers the requirements for filing a declaration of succession, the handling of joint accounts, and where to include the bank account in the succession declaration, providing clear guidance to navigate this sensitive process.

Inheritance involves the transfer of a testator’s assets and debts to the heirs. In the case of a bank account, closing an Italian bank account after the testator’s death follows specific steps:

1. Account blocking: upon the death of the account holder, the account is temporarily blocked to allow for the necessary checks. During this period, only payments previously authorised by the deceased can be processed. However, the bank account remains active and can receive funds, if needed.
2. Notarised self-declaration: the heirs are requested to draft a self-declaration confirming their identity and that of other beneficiaries which need to be signed in the presence of a public officer (i.e.: Notary).
3. Balance Statement: this notarised self-declaration notarised declaration is required to submit an application to the bank which needs to be filed together with an original hardcopy of the death certificate and eventually a proxy to any representative. The statement reports the balance of the funds held at the date when the deceased passed away.
4. Inheritance declaration: this document is not strictly required in every case. Indeed, filing an inheritance declaration is requested by law only if the asset includes real estate properties and/or funds held in the deceased’s bank accounts are over €100.000,00. In such cases, to unlock the account, the heirs need to provide the bank with a copy of the filed inheritance declaration which states the amount of funds within the estate.
5. Account unlocking, release of funds and closure: After submitting the required documents, the bank requests the beneficiaries to attend a meeting in person to sign the related documentation before proceeding with unlocking the account and releasing the funds. Alternatively, when the beneficiaries are not able to attend the above meeting altogether at the same time, they can delegate their legal representative to act on their behalf and to receive the funds on their behalf via Power of Attorney.

There are certain situations where a bank account may not be subject to the normal succession process in Italy. These include:

1. Joint accounts: If the account is held jointly with rights of survivorship, the surviving account holder may automatically inherit the full balance without it going through succession. For a detailed article about this topic, please refer to “How to close a joint bank account in Italy”.
2. Payable-on-death accounts: Some accounts may have a designated beneficiary who receives the funds directly upon the account holder’s death, bypassing the succession process.
3. Trust accounts: Funds held in certain types of trusts may not be considered part of the deceased’s estate and thus not subject to succession laws.
4. Certain pension or retirement accounts: Some types of retirement accounts may have designated beneficiaries and transfer outside of the normal succession process.
5. Life insurance policies: While not strictly bank accounts, life insurance payouts typically go directly to named beneficiaries and are not part of the estate subject to succession.

It is important to note that the specific treatment can vary depending on the exact account type, the bank’s policies, and the particular circumstances. Consulting with an Italian legal expert is advisable to understand how these exceptions might apply in individual cases.

Before you can close a bank account after a testator’s death, the division of inheritance money from that account depends on several factors, which are crucial to consider during the estate settlement process and it depends on whether there is a will:

1. If there is a will, the bank will follow the wishes expressed in the testator’s will and divide it among the heirs as per the will.
2. If there is no will (intestate succession), then the bank will apply the current Italian inheritance law and other succession regulations. Typically the spouse receives one-third of the assets while the children equally share the remaining two-thirds, and a surviving spouse without children inherits the entire estate. If there are only children, they inherit equally. In the absence of a spouse or children, the inheritance passes to parents, siblings, or more distant relatives in a predetermined order.

It’s important to consider that inheritance taxes may apply, which can affect the final amount each heir receives, and these tax obligations must be settled before the funds can be fully distributed. In some cases, you may need to file an inheritance declaration with Italian tax authorities, especially if the bank account funds exceed €100,000.

Ultimately, closing a deceased person’s bank account is a process that requires attention and expertise, since each step has both legal and financial implications. Not only does each bank in Italy apply different rules and procedures, but closing a bank account after the death of a loved one could become even more complicated when it comes to dealing with international inheritance laws.

Our experts in the Probate department offer assistance in international estate management and succession planning, ensuring that the deceased’s wishes and the rights of the beneficiaries are respected, avoiding eventual delays deriving from legal and fiscal implications.

For non-resident testators with international assets, closing a bank account in Italy can be more complex. Italian inheritance law may apply to the Italian bank account, while the law of the testator’s country of residence might govern other assets. This situation often requires coordination between Italian and foreign legal experts. Heirs may need to provide additional documentation, such as an internationally recognised death certificate and proof of their status as heirs under the relevant foreign law. The process may also involve dealing with cross-border inheritance tax issues and potentially longer processing times due to international verification procedures.

Closing a deceased’s Italian bank account used for business purposes involves additional considerations. If the deceased was a sole proprietor, the business typically becomes part of the estate. Heirs must decide whether to continue or liquidate the business, which affects how the bank account is handled. They may need to appoint a temporary administrator to manage ongoing financial obligations. If the business was a partnership or corporation, company bylaws and Italian corporate law will dictate the process. Heirs might need to work with the deceased’s business partners or shareholders to determine the fate of the business accounts. In all cases, it’s crucial to properly account for business assets and liabilities in the inheritance declaration.

Closing an Italian bank account after death becomes more complicated when there are ongoing legal disputes or frozen assets. If the account is subject to a court order or involved in litigation, heirs may need to obtain court approval before proceeding with closure. For accounts with frozen assets due to legal investigations or financial irregularities, heirs might have to work with legal authorities to resolve outstanding issues before accessing the funds. In such cases, the standard inheritance process may be suspended until legal matters are resolved. Heirs should seek specialised legal help to navigate these complex situations, as they may involve interactions between inheritance law, criminal law, and financial regulations.