Check Payable to Deceased Individual

Question:  If a check is made payable to "John Doe, deceased," who can negotiate it? If a check is made payable to "John Doe, deceased and Jane Doe," can Jane negotiate it?

Answer:  In both examples, the estate of John Doe is now the payee the moment the individual passes, and the estates endorsement is needed to negotiate the check. Jane cannot endorse the second check on her own because of the use of "and" between the two payees

The estate's endorsement may only be made by the personal representative of the estate, the duly-appointed executor or administrator. As a prerequisite to the endorsement, the probate court has to have appointed the personal representative, and that individual should document his or her appointment with the Letters Testamentary or other court document of appointment.

Check Payable to Deceased

Question:  If a check is made payable to "John Doe," but John Doe has passed away who can negotiate it? Can the check be deposited into an account in the name of John Doe?

Answer: The estate of John Doe is now the payee the moment the individual passes, and the estates endorsement is needed to negotiate the check.  The check CANNOT be deposited into the account that has John Doe’s name on it.  Ownership transfer happens at the moment of death.  The fact that we have not completed the processing of the account by removing the name does not allow us to accept the check for deposit.

Joint Accounts: How To Handle The Death Of A Joint Owner

Question: If you have a multiple ownership account (mother, son, daughter) and the mother dies and the account is in her SSN, do the funds roll to the two remaining joint owners, or must we place them into an estate account, thereby making sure inheritance taxes are paid through the estate?

Answer: There are varying answers to this question depending on whether the account was "joint with a right of survivorship" or a "tenancy in common."   Review the signature card the parties signed to see if it indicates a choice on the form of ownership.

POA Writing Checks After Member's Death

Question:  Can an account with a POA and where principal has died remain open, but have checks written by the POA after the death of the account holder. Do we have to pay the items?

Answer:   UCC section 4-405 permits, but does not require, the credit union to pay checks for ten days after the date of death (not date of notice) and requires that it stop paying checks if anyone claims an interest in the account. We should stop paying items ten days after the date of death, in any event, regardless of when they are dated. We should contact the attorney in fact and inform him or her that no further clearings will be permitted on the account and that his or her authority on the account ended on the date of death. Make it clear that any checks presented on that date or later will be returned "account owner deceased."

POD Designation & Probate

Question:  Will an account with a POD designation avoid probate for the beneficiary?

Answer:  An account with a POD designation, if opened correctly, should become the property of the POD beneficiary upon the event of the account holder's death, without the necessity of probate. The beneficiary should be able to claim the account by documenting the account holder's death and the beneficiary's identification.

Who Trumps, POD or Personal Representative?

Question: If a primary account holder has elected a Payable on Death (POD) and the primary dies (the credit union has death certificate and personal representative papers), does the POD supersede the personal representative? Does the attorney or personal representative have any right to the account or to account information?

Answer: Like so many other times in our line of work there is no perfect answer here, because the "losing" party can always tie this up in court. One certainty is that state's laws will ultimately determine who gets the money.

The usual result in cases like this is the death beneficiary (the POD in your example) takes title at the moment of death, and the estate has no legal interest in the account. The credit union will usually be insulated from liability if it makes a payment in that fashion. If there is to be a suit, it will then be between the heirs of the estate and the POD.

If, however, there is discrepancy in documentation and we cannot decide who gets the funds, we may have to petition the probate court to determine the end result.

Can Authorized Signers Still Sign when Owner Dies?

Question:  When the owner of a DBA dies, are the authorized signers still authorized to sign? The account uses the deceased owner's social security number.

Answer:   The abbreviation DBA usually means that we are dealing with a "sole proprietorship," which would mean the answer is "No". The authority of authorized signers ends with the death of the account's owner who approved the signers authority. Just like a Power of Attorney.  The account is owned by the decedent's estate, and the only individual authorized to access the account will be the personal representative (executor or administrator) of the estate, once he or she is approved or appointed by the probate court.

Exception:  In some cases a corporation will use a DBA designation.  In that case the corporation and the authorized signers ability to process transaction on the account are not affected by the corporate owners passing unless we have specific instructions to the contrary from another principal in the corporation.  This is why we require “Board Resolutions” from the corporation rather than simply a principals direction to add an authorized signer to the account.

Releasing Account Info to Estate Representative

Question:  If a member and the estate representative that has been assigned requests copies of deposits from six months or a year ago on the old account that was closed after our member passed away, should we provide the requested information.

Answer:  The estate representative stands in the legal shoes of the deceased member. He or she should be entitled to the requested information. Whose privacy are we protecting if we refuse to provide the information? The depositor is deceased and has no privacy rights to worry about. The estate is asking for the information, presumably to manage the estate's assets for the benefit of any heirs, so you can assume that the heirs would likely give you a thumbs up. This becomes somewhat problematic if the member was a joint and is the estate representative is asking for information on an account which is now solely in the name of the joint owner.  If we are unsure, however, we can ask the representative to obtain an order from the probate court or at the least contact our attorney for an opinion.

Death of a Business Sole Proprietor

Question:  What do we do with the business account upon the death of the sole proprietor?

Answer: If the account is registered with a POD beneficiary, we can deal with that person as we would with a personal account, assuming there is no prohibition in state law.

Otherwise, the account becomes part of the deceased's estate unless it qualifies under any state law allowing payments from the account of a deceased member.

IRA Check Payee Has Died -- Now What?

Question: If we have a IRA owner who received a required minimum distribution check and died before cashing it. What does the beneficiary do with the check?

Answer: The beneficiary owns the funds in the account at the time of death, not checks issuedprior to death. The check should be delivered to the personal representative for the decedent's estate.

Remove deceased or open a new  member record?

Question: If the deceased was the primary member, can we just remove them or do we have to open a new member record?

Answer: There is no hard and fast rule here.  For the most part we will simply remove the primary and allow the joint to move into the primary membership position. HOWEVER,we must make sure the surviving member is aware that we will not be able to spit IRS reporting.  If the member record had a number of CD’s the reportable income will be reported on the social security number of record as of yearend.  That usually isn’t a problem if the joint was a spouse.  If they were friends they may wish  to close the member record and open a new under their name so they would only be taxed for income from that point forward.