What happens to an HSA when the account holder is deceased?
You should choose a beneficiary when you set up your HSA. What happens to that HSA when you die depends on whom you designate as the beneficiary. If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse’s HSA after your death. If your spouse is not the designated beneficiary of your HSA, the account stops being an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. If your estate is the beneficiary, the value is included on your final income tax return.