Topic: Death of a Customer
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One of our certificate of deposit (CD) account customers died seven years ago. The CD was payable on death (POD) to her grandson. However, the signature card for the CD stipulates that it is not to be paid out until he turns twenty-one, and he has not yet turned twenty-one. Can we swap out the deceased customer’s social security number for the grandson’s social security number? The beneficiary’s mother now is demanding that we release the CD funds to her, and the executor would like to close the customer’s estate.
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Simply replacing the original accountholder’s social security number with the beneficiary’s social security number would not fulfill your customer’s intent, which was to wait until the beneficiary turns twenty-one before distributing the CD's proceeds. In general, the Illinois Trust and Payable on Death Accounts Act (“POD Act”) requires that POD accounts be distributed to beneficiaries…
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When a customer wants to designate an account beneficiary, we use the term “payable on death (POD)” in the title. Is that required? Or should we use “in trust for (ITF)” in the account title?
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Your question appears to be asking about POD accounts, and we are not aware of any specific titling requirements for POD accounts in Illinois law. Under the Illinois POD Act, a POD account is formed when the account holder or holders sign an agreement with the institution providing that on the death of the last…
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One of our customers has payable on death (POD) accounts that list her children as beneficiaries. She has requested that we add what her attorney calls a “right of representation” to the POD accounts. In other words, if one of her children predeceases her, she wants that parent’s POD account distribution to be given to her grandchildren per stirpes. Is that permitted? How would I title the accounts? (In this case, with a per stirpes distribution, if a named beneficiary predeceases the POD account owner, the customer wants the then-living descendants of that beneficiary to receive equal shares of that beneficiary’s share when the account owner dies.)
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We believe that a POD account can be distributed by “right of representation,” if this intent is made clear in the account agreement with your customer (beyond simply adding “by Right of Representation” to the account title). While this type of distribution for a POD account is unorthodox and could pose some remote risk to…
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We have an IRA customer who passed away. The named IRA beneficiary was a trust, and the trustee has requested a lump-sum distribution of all IRA funds. Do we make the check out to the IRA beneficiary, which is the trust, or to the trust’s beneficiaries?
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You should make the check payable to the trust, which is the IRA's beneficiary (an IRA beneficiary may be any person or entity, including a trust). Also, when making the distribution to the trust, keep in mind that the IRS rules require you to use the name and tax identification number of the trust, not…
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We have a payable on death (POD) account that lists beneficiaries as well as designated amounts for each beneficiary to be provided on the accountholder’s death. The accountholder recently died. Is it possible for a POD account to designate specific amounts for each beneficiary? There are insufficient funds in the account to satisfy each of the designated amounts. Should we prorate each beneficiary’s share or split the account evenly among all beneficiaries?
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We recommend that you distribute the remaining account funds pro rata to approximate your deceased customer’s instructions as closely as possible. To protect your institution from possible objections by the beneficiaries (who will not be receiving the full amounts of their designated shares), we also recommend that you notify the beneficiaries of the bank’s intent…
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We have a customer who passed away. An individual has called us several times wanting information about this customer’s safe deposit box. Can we tell her that the customer did not have safe deposit box account at our bank? This individual did not produce any documentation establishing herself as the executor of this customer’s estate.
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We do not recommend disclosing to this individual that the customer did not have a safe deposit box account at your bank. Regulation P’s privacy requirements prohibit your bank from disclosing “the fact that an individual is or has been one of your customers or has obtained a financial product or service from you.” In…
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We have a safe deposit box of a deceased customer. Can the attorney representing the estate appoint someone to access the lock box that is not on the account, or should we require a court order?
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The answer may depend on whether the estate representative is “independent” or “supervised.” Illinois recognizes two types of administrators and executors of estates — independent and supervised. Most estate representatives are independent, which means they can administer the estate without court approval of their specific actions. Illinois law expressly permits independent administrators and executors to…
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A customer recently died. His daughter came in with an unsigned small estate affidavit to close her father’s account and collect the funds. Is that sufficient? Is there any other documentation we need to see before closing the account and releasing the funds?
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An unsigned affidavit is not adequate for you to close the account and release the funds. A small estate affidavit must be substantially similar to the sample form set forth in the Illinois Probate Act, which includes requirements that the affidavit be signed, notarized, and accompanied by a certified copy of the decedent’s death certificate.…
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Our deposit agreements do not specify that co-owned accounts are presumed to be joint accounts with the right of survivorship. When an account co-owner dies, do the funds in the account belong to the surviving co-owner?
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In our view, the funds belong to the surviving account owner, provided that the account agreement permitted all account owners to withdraw funds, and the joint account was not established as a convenience account. The Illinois Supreme Court has interpreted the Joint Tenancy Act to require a signed agreement “permitting payment to the survivor” in…