What happens to savings and loans when a member dies

When someone dies, their credit union savings do not simply sit in limbo until the whole estate is settled. Most members have signed a nomination when they joined, naming the person they want their money to go to, and the credit union can pay that person directly, often quickly and without waiting for probate. Enterprise Credit Union, for example, states that a nominated person can receive up to £5,000 "paid quickly without waiting for your estate to be settled"¹. In Northern Ireland the limit is higher: Omagh Credit Union pays proceeds of an account up to a maximum of £20,000 directly to the nominee².

Many credit unions also insure their members' savings and loans at no direct cost, so a death can trigger an insurance payout on top of the balance. Teachers' Credit Union states that in the event of a member's death their credit union savings are insured, subject to terms, conditions and eligibility criteria³. Cranhill Credit Union describes its Life Savings Protection as leaving "your loved ones a cash lump sum when you die"⁴.

This page explains what the family needs to do, how nominations work, the limits on nominated payments, what happens to savings above those limits, and how any outstanding loan is treated. It covers the whole of the UK, because the rules differ between Great Britain and Northern Ireland in one important way: the amount a nomination can pass on.

What happens to credit union savings when a member dies

The first thing to understand is that credit union savings are different from ordinary bank deposits in one practical sense: the member usually signed a nomination when joining, and that nomination decides who gets the money, ahead of the will. BDS Credit Union tells members that "upon joining the Credit Union you will nominate who you would like to leave your money to in the event of your death"⁸. Muckamore Credit Union asks the same of savers: "You will be asked to nominate a beneficiary, the person you want your money paid to when you die"⁹.

So when a member dies, the family's first task is to tell the credit union, usually with a death certificate. The credit union then checks whether there is a valid nomination on file. If there is, it pays the nominated amount to the nominee directly. Kilkeel Credit Union explains that the nominated property "does not form part of a deceased person's estate", which is why it can be released without the delays of probate⁵. If there is no valid nomination, the savings fall into the estate and are dealt with like any other asset, under the will if there is one, or under the rules of intestacy if there is not².

On top of the balance itself, many members have life savings insurance. This is cover the credit union arranges, usually at no direct cost to the member, which pays out an extra sum based on the savings held at death. Teachers' Credit Union states that savings are insured on death, subject to terms, conditions and eligibility criteria³, and Cranhill Credit Union's Life Savings Protection pays a cash lump sum to the family⁴. Falkirk District Credit Union gives a concrete example of how this can work: in addition to the savings, 150% of the member's savings is paid to the nominated beneficiary, to a maximum payout of £2,500¹⁰. The exact multiple and cap vary between credit unions, so the family should ask the credit union what cover applied to the member.

One point worth knowing: membership and savings are tied together in a credit union. Just Credit Union's terms state that members closing their savings accounts automatically end their membership and cease to be shareholders¹⁰. After a death this works in reverse: once the shares are paid out, the membership ends with them.

Nominating someone to receive your savings

A nomination is a written instruction to the credit union about who should receive the money in your account when you die. Teachers' Credit Union describes it as a facility "whereby you can nominate who is to receive the property of your accounts with the credit union upon your death"³. Kilkeel Credit Union notes the facility is available to members over 16 years of age⁵.

The nomination is a formal document. Kilkeel Credit Union states that "a completed nomination must be signed and witnessed"⁵. This matters because the nomination has real legal force: it overrides the will for the amount it covers, and the credit union needs to be certain about who made it and when. The most recent nomination is the valid one, so if you have filled in more than one form over the years, the latest signed and witnessed form is the one that counts⁵.

You can change your mind as often as you like. Kilkeel Credit Union states that "you may change the details of your nomination as often as you like"⁵, and Muckamore Credit Union tells members they can change the name of their beneficiary at any time⁹. Life changes are a good prompt to check: marriage, a new child, a bereavement or a separation can all mean the person you named years ago is no longer the person you would choose now.

Who you can nominate is broad. There is no requirement that the nominee be a relative, and no requirement that they be a member of the credit union. This is what makes nominations especially valuable for people whose nearest and dearest would not automatically inherit under the rules of intestacy, such as an unmarried partner. The dedicated page on nominating someone to receive your shares covers the practical steps.

How much a nomination can pass on: £20,000 in Northern Ireland, £5,000 at some credit unions

The amount a nomination can pass on depends on where in the UK the credit union is based, and the difference is large.

In Northern Ireland, a nomination can pass on up to £20,000. Kilkeel Credit Union states that a member may nominate a person of their choice to receive their property "up to a maximum value of £20,000 in Northern Ireland", and Omagh Credit Union confirms that proceeds of an account up to a maximum of £20,000 can be paid directly to nominees on death⁵. Any amount in excess of £20,000 forms part of the estate⁵.

In Great Britain, the position described by individual credit unions is a £5,000 figure. Enterprise Credit Union states that "you can nominate someone to receive up to £5,000 directly from your savings", paid quickly without waiting for the estate to be settled, with any remaining amount paid to the estate¹. Its FAQ gives the same figure¹¹. Because the £5,000 limit is described by credit unions rather than set out in a single official figure, members should confirm the exact limit with their own credit union.

The path savings take depends on whether a valid nomination exists and how much the account holds.

The practical effect of the limit is about speed. Money paid under a nomination reaches the nominee without probate, which can take months. Money above the limit waits for the estate to be settled like everything else. A member with savings well above the limit who wants a particular person provided for quickly may need to think about how the whole estate is arranged, not just the nomination. The pages on credit union savings accounts and on life savings insurance explain the accounts and cover that build up the balance in the first place.

When a nomination is cancelled automatically

A nomination does not last forever untouched. Certain events cancel it automatically, whether or not the member intended that.

The clearest case is the nominee dying first. Omagh Credit Union states that "if your Nominee(s) dies in your lifetime, your nomination is automatically revoked"², and Kilkeel Credit Union says the same⁵. The money does not pass to the nominee's own family: the nomination simply ends, and the savings fall back into the estate unless a new nomination is made.

Marriage has the same effect. Kilkeel Credit Union states that "a nomination is automatically revoked by your subsequent marriage"⁵. The same principle appears in the wider savings world: the National Savings Regulations 2015 provide that a nomination is revoked on the death of all nominees in the nominator's lifetime, on marriage or the formation of a civil partnership by the nominator, by written notice, or by a subsequent nomination made before 1st May 1981, and "a nomination cannot be revoked by any other act, event or means"⁶. The reasoning is that a person's circumstances and responsibilities can change fundamentally on marriage, so an old nomination should not stand.

The practical lesson is to review a nomination after any major life event, and to check elderly relatives' arrangements too. A nomination made decades before may have been revoked without anyone realising.

A will cannot change a nomination

This is the point that catches families out. Kilkeel Credit Union states plainly: "A nomination is not revocable or variable by the terms of your will or by a codicil to your will"⁵. The nominated money is paid to the nominee, full stop, and it does not form part of the estate⁵.

So a will and a nomination do different jobs, and where they conflict, the nomination wins for the money it covers. A member who leaves everything to one child in a will, but has a nomination naming a different person, will find the nominated amount goes to the nominee and only the rest follows the will. Equally, a member who wants to change who benefits must change the nomination itself: rewriting the will achieves nothing for the nominated money.

This separation has advantages as well as traps. Because nominated money stays outside the estate, it can reach the nominee quickly, and it is not caught up in the estate's administration. The same principle is familiar from life insurance written in trust: Which? notes that if life insurance is not written in trust, the payout will usually be treated as part of the estate when you die¹³, whereas a trust, like a nomination, routes money outside it. For anyone planning their affairs, the nomination and the will need to be read together, and the page on nominating someone to receive your shares covers how to check what is on file.

Savings above the nomination limit: will, executor or next of kin

Money above the nomination limit, or all of the savings if there is no valid nomination, is dealt with as part of the estate. That means the ordinary machinery of inheritance takes over.

If there is a will, it names executors. Mental Health and Money Advice explains that when you make a will you "appoint a trusted person or people to deal with your money and assets after you die. These are known as 'executors'"¹². The executors collect the credit union savings along with everything else, settle any debts, and distribute what remains according to the will. The credit union will need the death certificate and proof of the executor's authority before releasing money above the nomination limit.

Some assets have their own rules even within an estate. Premium bonds, for example, cannot be transferred to beneficiaries after the holder has died; they have to be cashed by the executor of the will¹⁴. NS&I's Direct Saver terms show the typical pattern for savings accounts: if the account holder dies, no more deposits can be accepted, the balance becomes part of the estate, and the account continues to earn interest¹⁵. Credit union savings above the nomination limit behave in the same general way, as an estate asset collected by the executors.

If there is no will, the next of kin do not simply collect the money by being closest. The estate is distributed under the rules of intestacy, covered in the next section. Either way, the family's practical steps are the same: tell the credit union, provide the death certificate, and ask what documents it needs to release the balance.

Dying without a will: how intestacy affects credit union money

Dying without a will is called dying intestate. nidirect, the Northern Ireland government service, explains that "if you die without making a will, the law of Intestacy sets out who should inherit your estate"¹⁶. Sense puts the same point simply: your money and assets go to your relatives in a set order of priority¹⁷, and Mencap notes that where there is no will, "the rules of intestacy will apply"¹⁸.

That set order is the problem for many modern families. The rules prioritise spouses, civil partners and blood relatives. Mental Health and Money Advice's guidance on wills is blunt about the risk for unmarried couples: assets are divided according to intestacy rules, "which could leave out the partner"¹⁹. An unmarried partner, no matter how long the relationship, inherits nothing under the intestacy rules, and neither do stepchildren in most cases. Which? makes the same point about life insurance payouts not written in trust being caught by the same rules¹³.

This is where a credit union nomination can matter enormously. Kilkeel Credit Union highlights the benefit directly: "This is of benefit if the member dies without leaving a will as the property left in the credit union will not have to pass through the intestacy process"⁵. A nomination lets a member route money to an unmarried partner, a friend, a godchild or anyone else, outside the intestacy rules entirely, up to the limit. Omagh Credit Union confirms the fallback: "If there is no valid nomination and no valid Will, the estate will be disbursed as per the 'Rules of Intestacy'"².

Debts also interact with intestacy. National Debtline's guidance on debts after death states that credit debts, such as loans or credit cards, should be written off if the debt is only in the deceased person's name and they had no assets when they died²⁰. Where there are assets, including credit union savings passing through the estate, debts are paid from the estate before the remainder is distributed. So a nomination can also affect who bears the burden of debts: money paid directly to a nominee outside the estate is not available to the deceased's creditors in the way estate assets are.

Joint accounts: shares pass to the surviving member

Some credit union members hold savings jointly, most often with a spouse or partner. The rule here is straightforward and consistent across savings institutions: the surviving holder keeps the account.

MoneyHelper's guidance on joint accounts states that "if an account holder passes away, the joint account will continue in the remaining names"²¹. Macmillan's guidance for people affected by cancer says the same in plainer terms: "the joint owner will usually automatically inherit any money in the account if you die"²², and its end-of-life planning guidance repeats that the other person will automatically inherit any money in the joint account²³. NS&I's Green Savings Bond terms take the same position: if one account holder of a joint account dies, the surviving account holder gets ownership of the account¹⁵.

There is an important distinction in how ownership can be structured, which National Debtline explains in its debts-after-death guidance. Where money or property is held as joint tenants, "when one owner dies, their share does automatically pass to the other owner. It does not form part of the estate available to creditors"²². Where it is held as tenants in common, the deceased person's share does not automatically pass to the survivor and instead forms part of the estate, where it can be used to pay debts²². nidirect gives the same explanation for property: joint tenants own the whole together and the deceased's share passes automatically, while tenants in common each own a distinct share²⁴.

For a joint credit union account, the practical position for most couples is the simpler one: the survivor keeps the account and the money in it. But the debt side matters too. mygov.scot's guidance on the death of a partner warns that "any debts your partner had will be taken from the value of anything they owned when they died, including their share of joint bank accounts"²⁵. And National Debtline notes that where debts are in joint names or had a guarantor, the surviving person or guarantor becomes solely liable for them²². So a surviving joint member can inherit both the savings and the responsibility for any joint borrowing.

What happens to a credit union loan when a member dies

The distinctive feature of credit union borrowing is that loans normally come with life cover built in. The Building Societies Association's consumer factsheet on credit unions states that "when you borrow from a credit union you normally get free life insurance to cover the value of the loan", so the loan is repaid if you die before paying it back in full²⁶. This cover is generally described as loan protection or loan protection insurance, and the page on loan protection insurance covers it in detail.

Individual credit unions describe the same arrangement in their own terms. Teachers' Credit Union states that in the event of a member's death the credit union loan is insured, subject to terms, conditions and eligibility criteria, at no direct cost³. Bacup Credit Union explains that if a member dies before the loan is repaid, "this protection can help towards settling the debt"²⁷. Muckamore Credit Union goes further and describes its death benefit scheme: provided loan repayments are up to date, on death the loan balance is cleared and any shares are paid straight to the beneficiary⁷. Unify Credit Union tells members that at death the beneficiary receives the savings together with any insurance benefit, and the loan could be paid off too, with conditions applying²⁸.

Whether the loan is cleared depends on the cover, whose name it is in, and what the estate holds.

The conditions matter. Cover is typically subject to age limits and to the loan repayments being up to date, as Muckamore's scheme shows⁷. Where cover does not apply, the loan becomes a debt of the estate like any other. National Debtline's guidance sets out the general rules: if the debts are in joint names or had a guarantor, the surviving person or guarantor becomes solely liable²², and credit debts should be written off if the debt is only in the deceased person's name and they had no assets when they died²⁰. Family members are not personally liable for a dead person's sole debts, and the page on falling behind on a credit union loan explains the wider position for borrowers.

For the family, the practical step is the same as with savings: contact the credit union, tell it about the death, and ask two questions. Did the member's savings have life cover, and did the loan have loan protection? The answers determine whether the estate receives an insurance payout and whether the loan is cleared.

Where to get help

Dealing with money after a death is stressful, and several free services can carry some of the weight.

For the credit union itself, the first call is to its office with the death certificate. Ask about the nomination, any life savings insurance, any loan protection, and what documents it needs. If a complaint arises about how a credit union handled a savings account or a payout, the Financial Ombudsman Service can look at complaints about savings and investments, and its service is free²⁹.

For the wider estate, free help is available. MoneyHelper, the government-backed money guidance service, publishes guidance on joint accounts and everyday banking²¹. National Debtline provides free guidance on debts after death in England and Wales²², and mygov.scot covers the practical steps after a partner's death in Scotland²⁵. Macmillan's end-of-life guidance helps people sort out practical and financial affairs in advance²³.

There are also services that reduce the admin. The Death Notification Service lets a family tell participating banks about a death once, rather than contacting each one separately, though Which? notes that it only covers the participating banks, so other institutions, loans, investments, shares and other debts must still be checked and the providers contacted directly³⁰. Credit unions are not banks, so the family will need to contact the credit union itself.

One further situation deserves a mention. Where a member had an appointee managing their benefits and money, Scope warns that if the appointee dies, "your personal account will be frozen and the claimant will have no access to their money"³¹. Families caring for a vulnerable member should plan for this, and the pages on credit union savings accounts and finding a credit union you can join cover the arrangements that can be put in place.