An assisted living facility in our area has representative payee status for two of our customers who have died, and the representative payee has asked us to determine how the customers’ remaining funds should be handled. We returned the customers’ social security deposits on notification of their deaths, but we believe that the representative payee is responsible for determining whether there are representatives for their estates or contacting an attorney or probate court for disbursement of their remaining funds. What, if any, obligations does our bank have at this point? Also, should the account remain titled as originally set up, with the assisted living company listed as representative payee?

We do not believe that your bank has any obligations with respect to your deceased customers’ funds until representatives of their estates come forward, or the accounts become abandoned property.

Federal law requires banks to return any social security benefits received after a beneficiary has died (either for the month of death or after the month of death, depending on the type of benefits). As to the funds remaining in the account, the Social Security Administration’s Guide for Representative Payees states that “if the beneficiary dies, [a representative payee] must give any saved benefits to the legal representative of the estate. Otherwise, the savings must be managed according to state law.” Illinois law does not require banks to determine whether there is a legal representative for a deceased customer’s estate. Nor does it require banks to contact an attorney or probate court for disbursement of any remaining funds.

Consequently, we believe it is the representative payee’s responsibility to distribute the benefits remaining in your deceased customers’ accounts, and other funds should be handled according to your procedures for any account for which the owner has died. We recommend freezing the accounts and waiting until the representative payee pays the remaining social security benefits to a legal representative of the customers’ estates or until a representative of the customers’ estates comes forward to close the accounts.

Also, we do not recommend immediately removing the representative payee from the accounts or immediately retitling the accounts after your customers’ deaths. While a representative payee has no legal authority to manage non-Social Security income, they do have the obligation to “give any saved benefits to the legal representative of the estate.”

If there is no activity on the accounts, they will be presumed abandoned and must be reported to the Illinois Treasurer as unclaimed property two years after the last indication of interest by the deceased customers (or by their legal representatives).

For resources related to our guidance, please see:

31 CFR 210.10(a) (“An RDFI shall be liable to the Federal Government for the total amount of all benefit payments received after the death or legal incapacity of a recipient or the death of a beneficiary unless the RDFI has the right to limit its liability under § 210.11 of this part. An RDFI shall return any benefit payments received after the RDFI becomes aware of the death or legal incapacity of a recipient or the death of a beneficiary, regardless of the manner in which the RDFI discovers such information. If the RDFI learns of the death or legal incapacity of a recipient or death of a beneficiary from a source other than notice from the agency issuing payments to the recipient, the RDFI shall immediately notify the agency of the death or incapacity. The proper use of the R15 or R14 return reason code shall be deemed to constitute such notice.”)

Social Security Administration, A Guide for Representative Payees, printed page 12 (“If the beneficiary dies, you must give any saved benefits to the legal representative of the estate. Otherwise, the savings must be managed according to state law. If you need information about state law, contact the probate court or an attorney.”)

Social Security Administration, A Guide for Representative Payees, printed page 2 (“NOTE: We appoint a representative payee to manage Social Security and SSI funds only. A payee has no legal authority to manage non-Social Security income or medical matters. A representative payee, however, may need to help a beneficiary get medical services or treatment.”)

Social Security Administration, Understanding Supplemental Security Income Representative Payee Program (“Your representative payee’s authority is limited to matters between you and us. A power of attorney does not give someone authority to act as your representative payee. A representative payee has no authority to enter into any binding contracts on your behalf.”)

Illinois RUUPA, 765 ILCS 1026/15-201 (“Subject to Section 15-210, the following property is presumed abandoned if it is unclaimed by the apparent owner during the period specified below: . . . (6) financial organization deposits as follows: (i) a demand deposit, 3 years after the date of the last indication of interest in the property by the apparent owner; (ii) a savings deposit, 3 years after the date of last indication of interest in the property by the apparent owner. . . .”)

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.”)