Topic: Death of a Customer
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Has the government issued guidance on stimulus checks payable to deceased customers? Is a deceased recipient’s spouse required to return the funds?
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Yes, the IRS has issued guidance confirming that deceased individuals are not eligible for economic impact payments (EIPs) and explaining how to return EIPs. According to the guidance, an EIP made to someone who died before receiving it should be returned to the IRS. In the case of a joint EIP made to a deceased…
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A customer who named her husband as the beneficiary of her health savings account (HSA) prior to their divorce has died. The executor of the customer’s estate is claiming that the HSA belongs to the estate and not the beneficiary, since he is a former spouse. Is the executor correct?
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We do not have enough information to determine if the executor is correct, and due to the complexity of this issue (as discussed below), we recommend obtaining the advice of bank counsel or requesting that the executor provide a court order to your bank before you distribute the HSA. If the HSA qualifies as a…
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We had an account with three joint owners. One of the owners died, and the account was closed by his son, who was a joint owner on the account. The deceased customer’s other son (who was not a joint owner) has requested copies of account statements and provided us with documentation that he will be issued letters of office naming him as a co-administrator for the deceased customer’s estate. Does the son who will be appointed as a co-administrator have the authority to request this documentation?
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Once the son has been appointed as an administrator for the deceased customer’s estate, he will be entitled to access information relating to the account as of the date of your customer’s death. However, since there continue to be living owners of the account following the decedent’s death, the administrator would not be entitled to…
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Are we required to send monthly account statements to deceased customers? We have a few customers that we know are deceased and are the sole owners of their accounts. The account statements are generated monthly for these customers, and when we mail them out, they get returned to us. Can we reduce the frequency of these statements from monthly to yearly?
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No, you are not required to send account statements to deceased customers that are being returned to your bank. In fact, it is advisable to discontinue mailing periodic statements (whether monthly or yearly) to a customer that you know is deceased, in order to prevent the statements containing personal financial information from falling into the…
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An IRA customer died, leaving her trust as her beneficiary. The deceased customer’s son is the trustee of the trust, and he requested that the funds be transferred to a non-IRA savings account for the trust that he had opened. We closed the IRA as a death distribution and cut a cashier’s check payable to the trust. Since the IRA was closed as a death distribution, and not as an internal distribution to an IRA product, will the 1099-R that we issue have tax implications?
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Yes, the trustee’s decision to place the IRA funds in a savings account will have tax implications, although we are not qualified to address exactly what those tax implications will be. Generally, when an IRA is distributed to a beneficiary, the beneficiary must roll over the distribution into a new IRA within sixty days of…
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One of our customers recently passed away, and his son is successor trustee for the customer’s personal trust. The deceased customer held a lease on two safe deposit boxes individually, not in the name of the trustee. The trust document does not mention safe deposit boxes. Can the son access the box as trustee of his dad’s trust, and what documents do we need?
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Yes, we believe that the son may access the safe deposit boxes, provided that the trust document includes generic language covering the contents of the safe deposit boxes and the son can provide a will naming the son as executor of his father’s estate. Your bank may wish to request a Certification of Trust form…
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A husband and wife who held a safety deposit box at the bank recently died. Their children would like to open the box, which they think will contain several CDs that are in the name of the children, not the parents. They also think the box might contain a will. The parents did have three CDs issued by our bank in their children’s names. Can the children open the box and remove the CDs? Two of the CDs mature this week, and they don’t want them to automatically rollover.
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The children may open their parents’ safety deposit box if they present your bank with an “opening affidavit,” but we do not recommend allowing them to remove the CDs from the box until they present your bank with letters of office, another court order, or a small estate affidavit (if applicable). The Illinois Safety Deposit…
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We have a corporate customer that was wholly owned by an individual who died. The corporation now is owned by that individual’s estate, which is being probated. For beneficial ownership purposes, we plan to list the vice president of the corporation under the “control prong.” For the “ownership prong”, can we list the estate as the beneficial owner? Should we obtain identifying information on the estate’s executor?
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In our view, it would be prudent to list the executor of the estate as a beneficial owner of the corporation and to obtain the executor’s identifying information, although you are not required to do so. FinCEN’s customer due diligence (CDD) rule generally requires a financial institution to collect information about each individual who owns…
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Do we still need to check our list of deceased customers for unclaimed property? Do we still need to check for UTMA accounts for which the beneficiaries have reached the age of 21, plus the 3-year abandonment period, to ensure that the custodians were removed?
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Yes, we believe that both processes described in your question continue to be necessary under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). When a customer dies, their accounts generally will be presumed abandoned two years after their last indication of interest in the accounts (unless the applicable abandonment period is shorter than two…
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We have a customer (“M”) who died in 2017 at the age of 53. M had an IRA that named one primary beneficiary and no contingent beneficiaries. The primary beneficiary died prior to M’s death and no other beneficiaries were named. The IRA documentation provides that if M dies with no beneficiaries, the IRA funds shall be paid to M’s estate. M’s relative (“J”) informed the bank that they were going to be the executor of M’s estate, but J died before this occurred. As far as we know, an estate has not been opened for M. The executor of J’s estate provided us with their letters of office and informed us that M’s IRA funds should be paid to J’s estate. Can you confirm that absent additional documentation, our bank should not pay M’s IRA funds to J’s estate? Also, how should we handle M’s IRA funds, since their estate has not been opened?
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Based on these facts, we do not believe the executor of J’s estate is entitled to receive the funds in M’s IRA account without additional documentation establishing that J’s estate is the rightful beneficiary of M’s estate. A designated beneficiary of an IRA must be designated the IRA’s beneficiary as of the date of the…