Topic: Death of a Customer
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One of our customers recently died, and the customer had an outstanding credit card balance and a deposit account with our institution. Can we place a hold on the account in the amount of the credit card balance? We have not obtained a security interest in the deposit account.
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No, you will not be able to place a hold on the deposit account. The Regulation Z prohibition on offsetting deposit account funds against consumer credit card debts — with certain exceptions that do not appear to apply in this situation — also applies to freezing or placing a hold on deposit account funds. For…
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When a certificate of deposit (CD) holder dies, are we required to charge an early withdrawal penalty? What if the holder withdraws money for a medical emergency? Should we be documenting every instance of a waived penalty?
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You may waive the early withdrawal penalty required by Regulation D when a CD owner dies or is declared legally incompetent, but you may not waive the required early withdrawal penalty for withdrawals related to a medical emergency. Of course, early withdrawal penalties are required only for withdrawals within the first six days after the…
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Do we need to stop imposing service charges on a deposit account after the owner dies?
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We are not aware of any laws that would prohibit you from continuing such charges after the account owner dies. However, we would recommend communicating with the representative of the decedent’s estate within a reasonable time in order to determine their intentions with respect to the account, which could help avoid any later misunderstandings or…
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When we become aware of the death of a primary owner of a joint deposit account, what is the best practice in regard to the mailing of statements on the account? What if there is no joint owner?
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We recommend that joint account statements be mailed only to the surviving account holder after the death of a joint account holder. Due to privacy concerns, we do not recommend mailing statements to the deceased joint account holder’s address if it is different than the surviving account holder’s address, as this could risk exposing the…
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Is it a best practice to monitor obituaries in case we see that any customers have died?
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Whether your bank wishes to monitor obituaries is strictly a business decision, and we are not aware of any legal requirements to monitor for customer deaths. Note that an account holder’s death does not automatically revoke a bank’s authority to pay checks drawn on the account. The UCC provides that a bank may continue to…
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A local attorney has criticized our policy of freezing customer accounts when we find that the account owner has died (with exceptions for joint accounts). Should we, as this attorney urges, permit individuals with powers of attorney for deceased customers to withdraw account funds for funeral and other end-of-life expenses?
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We do not recommend permitting individuals with expired power of attorney documents to withdraw a deceased customer’s account funds. Under the Illinois Power of Attorney Act, a power of attorney expires when the person granting the power (the “principal”) dies. 755 ILCS 45/2-5
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One of our customers died, leaving one CD held in joint tenancy and one CD with a payable on death beneficiary. The joint tenant and POD beneficiary want us to pay the CD funds out to a family business instead of paying the beneficiaries directly. Is that permissible?
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We believe that it would be a best practice to pay the certificate of deposit (CD) funds directly to the beneficiaries of the accounts, instead of distributing the funds to a business entity that is not a beneficiary or owner of the accounts. Distributing CD funds directly to the account beneficiaries will create a clean…
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We received a small estate affidavit and will for a customer, and we received calls from two relatives of the deceased customer stating that the trust is void and that the estate is over $100,000. What should we do?
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These inquiries are red flags that this situation involves a higher risk of litigation. Because the bank might be named in a lawsuit (either from the affiant or from an unhappy relative who was not named in the small estate affidavit), we highly recommend contacting bank counsel who would be able to provide legal advice…
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We received a will that is not stamped by the court stating when it was filed. Should we require that wills submitted to us be court stamped?
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The Illinois Probate Act requires that the affiant attach a certified copy of the will to the small estate affidavit. 755 ILCS 5/25-1(b).
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We received a small estate affidavit for a customer who resides in another state. Can we accept an Illinois small estate affidavit?
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We are not aware of any reasons that an Illinois small estate affidavit could not be used.