WHEN A CUSTOMER DIES, WHAT ABOUT BANK ACCOUNTS AND LOANS?

Families may secure bank accounts and other assets when someone dies suddenly, but what happens to bank accounts and loans isn’t always straightforward.

We explained what you must understand about a Banker-Customer relationship after death and what family members, administrators, and executors must know.

What is the Banker-Customer Relationship?

Think of a bank and its customer as being in a debtor-creditor relationship.

1. If you have money in your account, the bank owes you.
2. If you owe a loan or overdraft, you owe the bank.

This relationship concerns agreements under the law and CBN (Central Bank of Nigeria) Regulations. When you open an account or take a loan, you agree with the bank.

Does This Relationship End When the Customer Dies?

Short answer: Yes and no. Legally, the contractual relationship between the customer and the bank ends when the customer dies.

However, any financial obligations or rights from that relationship survive and become part of the deceased’s estate. Meaning:

1. The bank must still pay the deceased’s estate any money in the account.
2. The estate must repay any unpaid loans or overdrafts—including accrued interest.

A Story to Help Understand This

Imagine Mr. Ade, an entrepreneur, passed away suddenly with ₦10 million in his enterprise savings account in Globus Bank. He has a ₦5 million business loan with interest accruing monthly.

His wife Chioma tries to access the account to pay school fees. The bank refuses without a Letter of Administration. She’s shocked: “But it’s our family money!”

Yes. But legally, that money is part of Mr. Ade’s estate. Until someone is officially appointed to manage the estate (called an administrator), the bank can’t release funds, and creditors (like the bank) can still demand repayment of loans with interest.

What Happens to the Bank Loan?

Mr Ade’s estate (not his wife personally) is responsible for repaying the loan. The obligation doesn’t vanish.

The interest on the loan continues to accrue until the estate fully repays the loan. The bank can lawfully demand repayment from the administrator of the estate.

Insights: Daura & Anor v. Union Bank (2024) explains that the loan contract survives the customer’s death, and the estate inherits the duty to settle the debt.

So, What Should proposed Administrators, Executors, and Beneficiaries Do?

If You’re a potential Administrator, Executor, or Beneficiary:

1. Do not touch or share the funds in the deceased’s accounts.
2. Confirm whether the deceased had any loans or overdrafts.
3. Encourage the family to apply for Letters of Administration as soon as possible.
4. Keep records of all debts and payments made by the estate.
5. Remember, if no one applies to manage the estate, banks may remain silent, and debts may grow.

An Administrator or Executor must:

1. Inventory all assets and debts, especially bank loans, interest-bearing accounts, or overdrafts.
2. Inform the bank of the death officially (with the death certificate).
3. Request account statements and loan documentation.
4. Pay debts before distributing funds to beneficiaries.
5. Work with a lawyer if unsure – mistakes can lead to personal liability.

Where no Administrator or Executor is Appointed. Here’s What You Can Do:

1. Any interested party (like a spouse, child, or creditor) can apply for Letters of Administration from the Probate Registry.
2. Until an administrator or executor is appointed, no one can legally access the deceased’s accounts or assets.
3. If there’s a delay in appointing an administrator, interest on debts may continue to rise, eating into the estate.

So, family members can inform the bank in writing of the customer’s death and request information on all pending loans, including where he’s a loan guarantor.

For the Business Community

If you run a business with credit facilities or operate an account in your name:

1. Document your wishes (via a Will or trust).
2. Keep a list of your bank liabilities for your loved ones.
3. Consider life insurance or debt protection plans to offset business loans.

Final Thoughts

The death of a bank customer doesn’t erase their bank obligations. The law expects the estate to tie loose ends by settling debts and collecting assets.

While emotionally painful, it’s vital to approach this phase with care and legal clarity.

Whether you’re a family member, lawyer, executor, or business associate, don’t assume. Ask questions, get legal help, and act with diligence.

Need help administering or managing an Estate? At SRJ Legal, we help families, administrators, executors, and professionals navigate estate administration, bank-related estate matters, and more.

We are the first bespoke education law firm. We complement our education law practice with fintech and commercial dispute (litigation). At the same time, we provide corporate counsel services to businesses, individuals, and families, including on estate administration law.