Topic: Death of a Customer
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We have two deposit customers who recently died. The first customer’s estate is represented by an executor. Can we permit the executor to deposit a check made out to the decedent into an estate account? The second customer was a joint accountholder with his wife. Can the wife deposit a check made out to the decedent into the joint account?
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Yes, an executor has the authority to endorse and deposit checks made out to the decedent into the estate’s account. In the second situation, however, we do not recommend permitting the wife to deposit the check into the account (which is no longer a joint account), unless fewer than ten days have passed since your…
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We have an account where the owner has a guardian, but we cannot find any documents establishing the guardianship. Now the owner has passed away. Does the guardian have any right to deceased customer’s account?
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No, we do not believe the guardian has any right to access the deceased customer’s account for the reasons discussed below. A guardian’s specific rights and responsibilities are established through a court order when the guardian is appointed. Before you allow a guardian to access another customer’s account, you must obtain a copy of the…
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If a customer passed away, and we need to issue a cashier’s check to the executor of the customer’s estate or the beneficiary of the customer’s payable on death (POD) account, who should our bank list as the remitter on the check?
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While there is more than one way to clear out an account following the death of a customer, if you use a cashier’s check, we believe the best approach is to list the remitter as follows: Account #12345 of John Doe, deceased.
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We have a mortgage loan that was signed by a husband and wife, with a third co-signer who was the father of one of the spouses. The father did not sign the mortgage or title; he signed only the note. We recently discovered that the father died about three years ago. Can we remove his name from the note without modifying or refinancing the loan?
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Yes, we believe that you can remove the co-borrower from the loan in this situation without modifying or refinancing the loan, provided there are no provisions in the loan agreement that might raise other issues. The CFPB addressed a similar question regarding the addition to a loan of a borrower’s successor-in-interest, such as a surviving…
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We have a customer who passed away. Prior to his death, his only son was appointed Guardian of his Estate and Person. According to the Letters of Office issued by the court, the guardian is “authorized to have, under the direction of the court, the care, management and investment of the Ward’s estate, and the custody of the Ward, and to do all acts required of him by law.” We do not know if the guardian is the executor or administrator of the decedent’s estate or if the decedent even had a will. Does the guardian still have the capability to act for the decedent’s estate?
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Based on these facts, it is difficult to determine what control (if any) the guardian maintains after the death of his ward. The Probate Act states that a guardianship terminates when the ward dies. However, until an executor or administrator is issued letters of office, a guardian retains the limited authority to sue for and…
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One of our customers called us shortly before he died to change the payable on death (POD) beneficiary for an account from his mother to his wife. We told him that we accepted changes in beneficiaries only in writing. However, the customer died before submitting the written form to us, and his wife believes that she is the POD account beneficiary. Do we need to respect the customer’s verbal request to change the beneficiary?
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No, you are not required to honor your customer’s verbal request. Illinois law requires POD account beneficiary changes to be both made in writing and accepted by the bank. Because you did not receive a written instrument from the customer, Illinois law does not require you to change the POD account beneficiary. Illinois law also…
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After one of our customers died last year, the executor directed us to distribute the customer’s accounts with appropriate documentation (a certified copy of the will and death certificate, as well as a small estate affidavit). Recently, another individual came into the bank with letters of office appointing the individual as administrator of the estate — from the same court in which the customer’s will naming the executor was filed. Which one takes precedence over the other? Have we transacted correctly?
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First, it is important to note that your institution is protected from liability when relying on a small estate affidavit. Because your institution distributed the customer’s accounts in reliance on the small estate affidavit presented by the executor, you are “fully protected and released” from any claims that may be made by the administrator regarding…
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One of our IRA customers died last year. The customer had reached the age for required minimum distributions (RMDs), but he did not take his distribution for 2015 before dying. The IRA had two beneficiaries, a son and daughter. The son opened an inherited IRA, and the daughter took her portion as a lump sum distribution. Should we have taken out the RMD before distributing the IRA to the son and daughter?
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No, your institution generally is not responsible for taking out the RMD (unless you have agreed to do so in your account agreement). When an IRA owner dies after reaching the age of 70 ½, the IRA’s beneficiaries are responsible for distributing the owner’s RMD for the year of death — it is not your…
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After a safe deposit box customer died, one of the customer’s children came in with keys to the box. However, no executor or administrator has been appointed for the customer. How should we go about closing out the box?
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If someone can present a small estate affidavit to your institution, that individual may open the safe deposit box and remove its contents. A financial institution is required to permit a person designated in a small estate affidavit to “open the box and examine and remove the contents.” For resources related to our guidance, please…
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One of our customers recently died. A family member has asked us to keep the customer’s deposit account open for about two months to accept refunds of insurance premiums and other credits. Would you recommend opening a new account using the executor’s social security number (SSN)?
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We believe that your customer would need to obtain an employer identification number, also known as a taxpayer identification number (EIN or TIN), for the estate, even if it qualifies as a small estate under Illinois law. The IRS requires that every estate obtain an EIN, no matter the size of the estate. Your institution…