When a customer passes away, their accounts do not simply disappear. Banks must determine how to handle deposit balances, credit lines and loans that remain in the name of a deceased individual. These are often referred to in the industry as deceased accounts.
The United States records roughly over 3 million deaths per year. Each death can ripple across various accounts, including checking, savings, credit cards, auto loans and mortgages. At the same time, household debt reached historic levels in 2025, which includes more than a
Put simply, millions of accounts transition into deceased handling each year, and when they are not managed consistently, banks face rising risks of unpaid balances, delayed recoveries and
The first obstacle is the probate patchwork. Estate administration moves through county courts with different forms, thresholds and timelines. What qualifies as a "small estate," whether an affidavit suffices to transfer assets without full probate, and even what counts as a valid notice of death can change from one jurisdiction to the next. Probate rules are state-governed, and Uniform Probate Code adoption is only partial, reinforcing variability. Institutions are often forced to adjudicate authenticity on the fly: Is this certificate authoritative? Is this person allowed to speak for the estate? While those questions are answered, interest may accrue, and documentation may chase itself in circles. In practice, that delay increases charge-off risk and invites disputes that nobody wants to have.
How can lenders stop elder fraud when a scam is already underway? One approach, allowed by a growing number of state laws, is to contact someone the client trusts. It's a tactic that can work quickly — or backfire.
There is a better path that does not federalize probate or rewrite state law. The industry can agree on a shared operational foundation that sits above the local rules. The foundation starts with common definitions on what constitutes an authoritative death notification, who is authorized to act at each stage of the process and which documents establish that authority. It continues with a prioritized document hierarchy that recognizes digital realities. Courts and vital-records authorities are issuing certified electronic records with increasing regularity; banks should be able to verify those securely through interoperable channels.
Communication must be a policy decision. Define who can be contacted, for what purpose and when. Pause contact entirely until authority is validated. Use plain-language disclosures that clarify liability by role (executor, co-borrower, authorized user survivor) and state why specific documents are required.
During validation windows, suspend interest and late fees by rule, not by exception, and route any recovery efforts to the estate, not survivors who have no personal liability. Trained teams working from these standards resolve cases faster and help reduce complaints. More importantly, they recover more from the estate itself, precisely because the rules are more transparent and defensible.
Regulatory complaints in the estate space are negligible compared with the wider debt collection industry. That record underscores that the core challenge is not abusive conduct, but rather the fragmented and inconsistent process that creditors are forced to navigate.
The estate recovery process doesn't require a new set of rules, as it already operates under a combination of federal and state regulations, reinforced by industry standards developed through collaboration with regulators more than a decade ago. What is needed now is stronger adoption of technology and wider reliance on established expertise to close the gaps created by fragmented probate systems.
With thousands of courts across the country, creditors often face inconsistent timelines, documentation requirements and notification practices. Technology can ease these challenges by validating digital death certificates and court authorizations, streamlining small-estate affidavits and improving secure data exchange. Common reporting codes for deceased accounts and standardized dispute paths would also help prevent post-death derogatory claims while preserving valid estate claims.
When creditors combine this expertise with digital tools, they can reduce delays, minimize errors, and provide a clearer, more compassionate process. The opportunity lies not in creating a new framework, but in modernizing existing practices to better align creditor rights with consumer protection.
