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Our bank sends checks to the family in order to honor deceased customers. If such a check never is cashed, even after we attempt to contact the deceased customer’s family, what procedures should we follow?

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If such a check remains uncashed and undeposited for three years, your bank must report the check to the Illinois Treasurer as unclaimed property. Under the new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), a check on which your bank is directly liable will become reportable as unclaimed property when three years have passed without any indication of interest from the check’s owner. Unclaimed property must be reported and remitted to the Illinois Treasurer. Also, if the check has a value of over $50, your bank must follow the Illinois RUUPA’s due diligence procedures before reporting and remitting the property.

Also, while the Uniform Commercial Code (UCC) provides that banks are not obligated to pay checks that are more than six months old, this rule applies only to checks drawn on a customer’s account. In this case, the honorary checks are drawn on your bank’s account, and your bank remains obligated to pay such checks until they are reported and remitted to the Illinois treasurer as unclaimed property.

For resources related to our guidance, please see:

  • Illinois RUUPA, 765 ILCS 1026/15-201(3) (“When property presumed abandoned. Subject to Section 15-210, the following property is presumed abandoned if it is unclaimed by the apparent owner during the period specified below: . . . (3) any instrument on which a financial organization or business association is directly liable, 3 years after issuance; . . .”)
  • Illinois RUUPA, 765 ILCS 1026/15-501(a) (“Subject to subsections (b) and (c), the holder of property presumed abandoned shall send to the apparent owner notice by first-class United States mail . . . if: . . . (2) the value of the property is $50 or more.”)
  • Illinois UCC, 810 ILCS 5/4-404 (“A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer’s account for a payment made thereafter in good faith.”)
     
  • Official Comments, UCC § 4-404 (“Certified checks are excluded from the section because they are the primary obligation of the certifying bank (Sections 3-409 and 3-413). The obligation runs directly to the holder of the check. The customer’s account was presumably charged when the check was certified.”)