Topic: Death of a Customer
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We have a checking account that was owned by John Doe, payable on death to Jane Doe. When John died, the account never was part of his estate; the account passed directly to Jane. The executor of John’s estate has requested account records prior to the date of death. Does the executor have the right to see those account records?
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Yes, the executor may access bank account records up to the deceased accountholder’s date of death. The federal privacy regulations permit banks to disclose account information to “persons holding a legal or beneficial interest relating to the consumer” and a consumer’s representative, such as an executor. For resources related to our guidance, please see: Regulation…
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We have an IRA customer who passed away last year. He named his five children as beneficiaries. They want to know whether they have to break down the IRA into five inherited IRA’s — one for each beneficiary.
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No, we are not aware of any requirement that multiple IRA beneficiaries must open separate inherited IRA accounts, but the IRS rules permit them to do so at any time. For resources related to our guidance, please see: IRS Publication 590-B — Distributions from Individual Retirement Arrangements (IRAs) (2015) (“A single IRA can be split into…
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The executor for a customer’s estate contacted us to request account records. The customer’s account has a surviving joint owner with a right of survivorship. Can we provide account records to the executor?
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Yes, the executor may access bank account records up to the date of death — but the executor would not have any right to information about the account after the date of death. The federal privacy regulations permit banks to disclose account information to “persons holding a legal or beneficial interest relating to the consumer”…
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A customer who lives in California was the sole beneficiary of a traditional IRA and established a beneficiary IRA with our bank. Does she need her estranged spouse’s consent to designate a non-spouse beneficiary on that account?
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No, we do not believe that your customer needs to obtain the consent of her spouse in this situation. However, because this case involves California law, you also may wish to consult with your bank counsel. Community property states automatically grant an interest in property owned by one spouse to the other spouse in most…
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A husband and wife passed away simultaneously in a house fire. They have a joint deposit account with a right of survivorship, but each has a separate executor. How do we disburse the funds in the account?
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Under Illinois law, if two people with joint tenancy in a bank account die simultaneously, the account “shall be distributed 1/2 as if one had survived and 1/2 as if the other had survived.” For resources related to our guidance, please see: Illinois Simultaneous Deaths Statute, 755 ILCS 5/3-1(c) (“If 2 persons hold title to…
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When a non-spouse inherits an IRA, can they add their own beneficiaries to the IRA?
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The quick and general answer to your question is yes, but the facts are important. The rules for inheriting IRA assets can be complicated and may depend on the initial beneficiary's relationship with the original IRA owner, the type of IRA owned, and the age of the initial beneficiary, among other things. For example, a…
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We have a traditional IRA for a customer who recently died (after reaching the age of 70½). The IRA has five beneficiaries, who have requested that we make lump sum distributions for their shares of the account. Do they need to open new IRAs before we distribute their shares?
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We are not aware of an IRS requirement that IRA beneficiaries open new IRAs before taking lump sum distributions. Of course, the IRS rules may impose taxes on such distributions, but they do not prohibit an IRA trustee from making a lump sum distribution when requested by a beneficiary. However, we understand that there may…
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We plan to drill a safety deposit box that has been past due and unclaimed for more than five years. However, the last living joint leaseholder recently came forward to claim the contents. Can we give him the contents of the box, or do we have to remit the contents to the State Treasurer?
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You may give the contents of the safety deposit box to the joint leaseholder. The Uniform Disposition of Unclaimed Property Act requires financial institutions to report and remit abandoned property to the State Treasurer. If contents of a safety deposit box are unclaimed for five years after the leased expired due to nonpayment — which…