We sometimes learn of a customer’s death from a federal agency’s ACH death notification entry (DNE). Does a DNE notice count as confirmation of a customer’s death? Can we refuse to remit property until we have a death certificate on file, since we would end up remitting the property after three years of inactivity in any event?

Yes, we believe that your institution should treat a DNE notice as confirmation of a customer’s death under the new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). We do not recommend waiting until a death certificate is presented.

Generally, the Illinois RUUPA shortens the presumed abandonment period for property held by a deceased customer to just two years from the last indication of interest (unless the applicable period is shorter than two years). For tax-deferred retirement accounts and securities, the law imposes additional responsibilities for confirming a customer’s death after your bank “in the ordinary course of its business receives notice or an indication of the [apparent owner’s] death.” The Illinois RUUPA does provide some relief for holders that are unaware of the apparent owner’s death, but only if the holder failed to report and remit property “due to lack of knowledge of the death.”

The law does not define “knowledge” of a customer’s death (except in the context of life insurance and annuities), but we believe that a DNE notice should be treated as knowledge of a customer’s death, as it is an official notice from a federal governmental agency. Once your bank has received a DNE, we recommend treating that customer as deceased unless you know the DNE to be in error. We do not recommend waiting until three years of inactivity have passed, since in many cases a customer’s death will shorten the presumed abandoned period to just two years.

Also, we should note that after a customer’s death, the “owner” of that customer’s account may be a payable on death (POD) beneficiary, a surviving joint owner, or a legal representative of the customer’s estate, such as an executor or administrator. In such cases, the bank should look to these individuals or entities for any future indications of interest that would prevent the presumed abandonment period from running.

For resources related to our guidance, please see:

Illinois RUUPA, 765 ILCS 1026/15-201 (“Notwithstanding anything to the contrary in this Section 15-201, and subject to Section 15-210, a deceased owner cannot indicate interest in his or her property. If the owner is deceased and the abandonment period for the owner’s property specified in this Section 15-201 is greater than 2 years, then the property, other than an amount owed by an insurance company on a life or endowment insurance policy or an annuity contract that has matured or terminated, shall instead be presumed abandoned 2 years from the date of the owner’s last indication of interest in the property.”)

Illinois RUUPA, 765 ILCS 1026/15-1204(c) (“A holder who fails to report, pay, or deliver property within the time prescribed by this Act shall not be required to pay interest under subsection (a) above or be subject to penalties under subsection (b) above if the failure to report, pay, or deliver the property was due to lack of knowledge of the death that established the period of abandonment under this Act.”)

Illinois RUUPA, 765 ILCS 1026/15-202(a)(2)(B) (“When tax-deferred retirement account presumed abandoned. . . . (a) Subject to Section 15-210, property held in a pension account or retirement account that qualifies for tax deferral under the income-tax laws of the United States is presumed abandoned if it is unclaimed by the apparent owner after the later of: . . . (2) the earlier of the following dates: . . . (B) one year after the date of mandatory distribution following death if the Internal Revenue Code requires distribution to avoid a tax penalty and the holder: (i) receives confirmation of the death of the apparent owner in the ordinary course of its business; or (ii) confirms the death of the apparent owner under subsection (b).”)

Illinois RUUPA, 765 ILCS 1026/15-202(b) (“When tax-deferred retirement account presumed abandoned. . . . (b) If a holder in the ordinary course of its business receives notice or an indication of the death of an apparent owner and subsection (a)(2) applies, the holder shall attempt not later than 90 days after receipt of the notice or indication to confirm whether the apparent owner is deceased.”)

Illinois RUUPA, 765 ILCS 1026/15-208(d) (“When security presumed abandoned. . . . (d) If a holder in the ordinary course of its business receives notice or an indication of the death of an apparent owner, the holder shall attempt not later than 90 days after receipt of the notice or indication to confirm whether the apparent owner is deceased. Notwithstanding the standards set forth in paragraphs (a), (b) and (c), if the holder either receives confirmation of the death of the apparent owner in the ordinary course of its business or confirms the death of the apparent owner under this subsection (d), then, the property shall be presumed abandoned 2 years after the date of death of the owner.”)

Illinois RUUPA, 765 ILCS 1026/15-102(21) (“‘Owner’, unless the context otherwise requires, means a person that has a legal, beneficial, or equitable interest in property subject to this Act or the person’s legal representative when acting on behalf of the owner. The term includes: . . . (B) a beneficiary, for a trust other than a deposit in trust; . . .”)