Generally, when you die, the funds held inside your bank account become part of your estate. Federal banking laws do not require your bank to hand over funds to pay for your funeral unless someone authorized by the court to administer your estate withdraw funds. However, there are several circumstances in which your friends and relatives can access funds held in your account to cover your final expenses.
TL;DR (Too Long; Didn't Read)
If your state of residence has laws allowing for final expense withdrawals, retrieving money from a decedent's account for funeral expenses should not be a problem.
Understanding State Laws
While federal banking laws have no provisions for covering final expenses, many states have laws that do allow for withdrawals from the accounts of the deceased. In Tennessee, the state's banking code enables your bank to let your family or creditors make a withdrawal of up to $10,000 to cover your funeral expenses. Crucially, the law state's that banks "can" allow withdrawals but banks are not required to allow these withdrawals. The state code allows for withdrawals to cover the medical costs that a decedent incurred prior to death. Some other states have similar laws, but you should find out if your state compels banks to allow these withdrawals or if the law gives the bank the option to approve or deny such withdrawals.
Pay on Death
Under both state and federal banking laws, you can add pay-on-death beneficiaries to your bank accounts. When you die, the money inside your account becomes the property of the named beneficiaries. Your heirs cannot continue to use the account but can close the account and access the funds simply by providing your bank with a certified copy of the decedent's death certificate and an acceptable form of personal identification such as a passport. Unless specified otherwise, funds are split equally between named beneficiaries so any one beneficiary could access his share of the money and use it to cover your funeral costs.
Assessing Probate Court
If your state's law does not allow for final expense withdrawals and you have no account beneficiaries, then the money you have in single-ownership bank accounts must pass through probate. The probate judge decides how to settle your estate after having reviewed your will and the claims on your estate that are presented by creditors and your heirs. During the probate process, the judge appoints an executor to handle your estate and that individual can close your account and disburse your assets. Since probate can take months or even years, you cannot expect your executor to have access to your account soon enough to cover your funeral expenses.
Exploring Joint Accounts
In most states, joint bank accounts are established as rights-of-survivorship accounts. This means that when you die, all of the money inside your account becomes the property of the surviving account owner. That individual can therefore access funds upon your death to cover your funeral expenses. Some states allow you to set up joint tenants in common accounts. In tenants in common accounts, upon your death the funds in the account are split between the surviving owner and your estate. The surviving owner can use her share of the money to cover your funeral, but your estate's portion of the money must go through probate.