deadcustomer1004_qanda - BOL Learning Connect

Dead Customer Issues 

Questions and Answers 

by 

Mary Beth Guard 

and 

John Burnett 

Checking Obituaries............................................................................................................ 1 

Interest-bearing accounts; IRS reporting ............................................................................ 2 

Payments from Small Balance Accounts............................................................................ 3 

Social Security and Other Government Payments.............................................................. 4 

ACH Items .......................................................................................................................... 5 

Business Account Issues..................................................................................................... 5 

Guardians, Conservators, Other Fiduciaries ....................................................................... 7 

Account Status and Re-titling ............................................................................................. 7 

Trusts................................................................................................................................... 9 

Dealing with Estates ........................................................................................................... 9 

Agents, Attorneys-in-Fact, Deputies, etc.......................................................................... 11 

POD Accounts, Totten Trusts........................................................................................... 12 

Checks payable to deceased or estate ............................................................................... 15 

Payments after Death under UCC 4-405 .......................................................................... 16 

Miscellaneous ................................................................................................................... 17 

Checking Obituaries 

1. Question: When a customer's obituary shows up in the local paper, can we 

automatically create an IRS 1099-Int for them (as of the date of their death) 

and remove their name from the account? 

Answer: Before taking any action based on an obituary, take the time to 

verify that the report applies to your customer. Before doing anything about 

a 1099, consider whether the account was jointly owned. If so, the account 

is now the property of the surviving owner(s). Reporting interest earned 

under the SSN of a surviving owner is appropriate. Removing a name from 

the account may be a unilateral decision if your bank policy requires it; 

however, it's a good idea to work with the surviving owner(s) to do this in a 

sensitive way. See also question #3. 

Copyright, 2004, Glia Group, Inc. (BOL Learning Connect) , Mary Beth Guard and John Burnett 1

2. Question: We freeze accounts when we find out from the obituaries that a 

customer has passed away. Is this OK? 

Answer: Again, we hope you are verifying the death before doing 

anything. State law may require you to freeze a decedent's account, but it 

may depend upon whether there is joint ownership or a POD interest. 

Determine what your state law requires, and act accordingly. 

Interest-bearing accounts; IRS reporting 

3. Question: If the bank has verified that the person listed in the obituary is 

our customer, should we stop paying interest at that time? 

Answer: The IRS ruling referred to (#84-73) does not require that the bank 

stop paying interest. In fact, doing so is probably a contract violation. The 

ruling states that you are required to report interest earned through the date 

of death as paid to the decedent, and interest paid after death as paid to 

either the new owner of the account (for example, the POD beneficiary or 

estate) or to any of the surviving co-owners of the account. You should be 

prepared to determine how much interest had been paid to the individual 

through the date of death. 

If the account was jointly owned, you can either split the 1099-INT reporting 

between the TINs of the deceased and a surviving co-owner, or report the 

entire year's interest under the number of the co-owner. 

If ownership is transferred to the estate of the deceased, or to a beneficiary 

under a POD or Totten trust, you should report using two separate 1099- 

INT forms. 

The ruling also provides the usual "reasonable cause" waiver for the $50 

penalty for filing an incorrect information return. 

4. Question: If account is interest bearing and sole owner dies, does the 

account continue to accrue interest? And what if the bank has no 

knowledge that the owner has died until later and the 1099 has been 

mailed? 

Answer: See question #3. 

5. Question: If customer dies mid year but we aren't notified until March of 

next year, we would have done the INT to the deceased. Are we required 

to fix the INT or can we give them the interest breakout pre / post death and 

have them sort it out with the estate tax reporting? 

Answer: We believe that you are permitted to provide the estate the 

information and let them sort it out with the IRS. But also see question #3. 


6. Question: If an interest check is sent after the date of death, due to the 

fact that the death was not immediately known, where does the interest 

earned get applied? The estate or the individual? 

Answer: Refer to Question #3 for information on IRS reporting 

requirements. The check should be negotiated by the estate. 

7. Question: What happens when the spouse is on the deed but not on the 

mortgage note, when the deceased spouse's SSN is being reported on the 

1098? 

Answer: Until such time as the estate of the deceased has dealt with the 

mortgage note by getting the real estate transferred and the loan paid off or 

refinanced, the note is the obligation of the estate, and its TIN should be 

used for reporting. See Question #3. 

8. Question: You said interest earned prior to deceased. Does IRS deal only 

with interest payments, and not earnings or accruals? 

Answer: The IRS deals with earned interest in the special case of "Original 

Issue Discount" (OID) transactions. They have lumped into that class of 

transactions an account that pays interest only at maturity, when the term of 

the account is more than one year. Otherwise, we believe the IRS is 

concerned with paid interest only. 

Payments from Small Balance Accounts 

9. Question: At what point does “it” become an estate? That is, at what point 

does the bank need more information than just a death certificate if say a 

child of a deceased parent comes in to close the parent’s deposit account? 

Answer: We are reading your question to involve the issue of whether the 

bank can permit payments from the decedent's account to a surviving family 

member. Not all states have laws allowing for this sort of treatment; those 

that do set the dollar limit beyond which the account should only be touched 

by the personal representative of the estate. 

10. Question: On small estates is the amount still $50,000 and less or has this 

changed? 

Answer: The "small estate" rules have varying dollar limits from state to 

state, and not all states have laws in this area. Check your own state's 

rules. 

11. Question: What about multiple banks that all have amounts within the 

small estate threshold? Is the bank responsible for knowing this? 

Answer: To the best of our knowledge, banks are not responsible for this 


information. In Massachusetts, the statute sets a low ceiling ($10,000) but it 

applies to individual accounts, not to aggregate balances. 

Social Security and Other Government Payments 

12. Question: A Representative Payee may be appointed by Social Security 

for the account of person who can't handle account. The owner of the 

funds dies; now what? Does the Rep Payee finish up paying bills or do we 

freeze funds, etc? 

Answer: According to SSA's website, the Representative Payee should 

preserve the funds already received and transfer them to the estate's 

representative, or otherwise handle them "according to state law." SSA 

recommends that the RP contact the probate court for guidance. 

13. Question: If customer has received their 10-1 social security benefits and 

on 10-4 the bank is notified the customer has died, does the bank have to 

return the 10-1 payment or just return future payments if any come in? 

Answer: This will depend upon the date of death. Presumably the 10/1 

payment is for September. If the customer died prior to 10/1, Treasury will 

start reclamation proceedings for the 10/1 payment because it was not 

properly made. If the customer died after 9/30, the 10/1 payment was 

proper. 

14. Question: SSA gives us the opportunity to provide info on who closed the 

account if an account is closed and we didn't know an owner was 

deceased. Correct? How much due diligence should we be doing? 

Answer: With regard to minimizing the bank's liability for any direct deposit 

payments received after the death of the recipient, SSA has specific 

guidelines in its "Green Book." Part of their requirements is sharing 

information about who withdrew funds from the account. 

15. Question: You mentioned briefly that we could turn the money over to the 

state early as abandoned property - how does this affect ACH reclamations 

from the Treasury. Does this protect the bank from that liability? 

Answer: No, it will not affect any liability you might have for a reclaimed 

payment. 

16. Question: Does the requirement to return checks for recurring Treasury 

payments apply even if the check was dated prior to the date of death? 

(For example, the decedent did not cash an old Social Security check.) 

Answer: Yes. Banks should not be deciding whether the estate of the 

deceased customer should receive such funds. Let the certifying agency 

(such as SSA) make the determination. 


17. Question: When we are dealing with a death and social security is coming 

in via ACH Is it better to wait for social security to come in for the 

reclamation or should we automatically return it R15? How can we 

determine if they were really due that money? Example date of death 

093004 ACH deposit 10-01-04? What is the best way to handle this? 

Answer: Our advice is to keep things simple and avoid having your return 

of the ACH "cross" with the reclamation. Place a hold on the funds or 

otherwise prevent them from being withdrawn, and await reclamation. 

Return any new credits with code R15. 

ACH Items 

18. Question: If the account is Joint do you have to stop ACH payments? 

Answer: ACH payments strictly in the name of the decedent should be 

stopped. Examples are direct deposit of any recurring benefit or payroll, and 

any uniquely personal debits (insurance premiums). 

19. Question: If we have a joint account that has ACH debits coming in and 

one of the account owners dies. Do we return the ACH item and if we do 

return it how do we code it. Example: A utility bill payment. 

Answer: A utility payment is a good example of an ACH debit that we'd not 

recommend you return if a joint account is involved. You have no way to 

know who authorized the payments; it could have been the survivor. 

20. Question: With ACH items on a joint account, should they be returned 

upon the death of one of the signers? How would we know which signer 

authorized the ACH item? (debit or credit) 

Answer: See other questions for debits. For credits, it's usually apparent 

whether they are for the decedent or the survivor or both. Return the items 

that you are certain are related only to the deceased. 

Business Account Issues 

21. Question: I have a customer who was killed last week. He and his brother 

had a partnership cattle account. How should we handle this account now? 

Answer: In most states, partnerships are automatically dissolved on the 

death of a partner. Note, however, that the partnership agreement may 

provide for a different result. Before taking any action with respect to the 

account (including freezing the account), it would be best to contact one of 

the surviving partners, or take a look at the partnership agreement, if you 

obtained a copy at the time of account opening. On a go-forward basis, it’s 

not a bad idea to note at the time of account opening (or at the time of 

making a loan to a partnership) whether the partnership agreement negates 

dissolution upon the death of a partner. 


22. Question: What is the best styling to ensure the continuity of a commercial 

account when it is a single ownership? Our concern is POD would require 

a death certificate which requires 2 to 3 weeks and checks payable to the 

business cannot be deposited into the existing account in the meantime. 

Answer: The whole question of sole proprietorships and business continuity 

is murky at best. There is simply no legally-sanctioned way to handle them 

once the owner has died. If designated as a POD account, the funds would 

not go to the estate. If this is a matter of keeping the business operating, 

payroll delivered, etc., a bank might weigh the risk of transferring control of 

the account to the designated beneficiary before receiving the death 

certificate, if the bank can satisfy itself as to the facts of the death and the 

identity of the beneficiary. 

23. Question: If we have an account that is styled as a sole proprietorship and 

it has the husband and wife and the husband dies would the wife own the 

funds in a community property state, such as Texas? 

Answer: A few states have statutes that expressly permit a joint husband 

and wife sole proprietorship. Typically, such accounts are treated as joint 

tenancy accounts, so that when either the husband or wife dies, the survivor 

would be deemed the owner and could continue transacting business. 

24. Question: May the estate of a sole proprietor d/b/a the adopted trade name 

to conclude unfinished business? 

Answer: If the business is to be wound down, the estate can do so in its 

own name. If the estate intends to operate the business for a period of 

time, your state law may require a trade name or fictitious name filing to be 

made. 

25. Question: Knowing the "creative ideas" you've used in the past to work 

with sole proprietorships after death would be helpful. 

Answer: We were aware of the provisions of the decedent's will and very 

familiar with his estate plan. His wife, who had been active in the business 

for years, would be "getting it all." She wanted to continue as a sole 

proprietor. So she went to town hall and got a fictitious name business 

license and we allowed her to assume control of the account. It was a risky 

decision, but one that our account officer made after weighing the pros and 

cons. We would not recommend this tactic without consultation with 

counsel. 

Another option is to allow someone who purports to be the executor of the 

decedent’s estate (who has not yetinitiated the probate) to sign an 

indemnification agreement to indemnify you against losses or claims, and 

then allow that person to conduct the necessary business. This might be a 

good option where the sole proprietorship has employees who need to get 


paid quickly. Keep in mind that the indemnity is only as strong as the 

financial strength of the person signing it! 

Because of the thorny issues that can arise after the death of a sole 

proprietor, we recommend chatting with your customer at the time of 

account opening about the possibility of designating a POD beneficiary. 

Since the sole proprietorship is synonymous with the individual (and not a 

separate entity), a sole proprietorship can typically have a POD beneficiary 

just as an individual could. 

Guardians, Conservators, Other Fiduciaries 

26. Question: Public Administrator appointed as guardian and conservator. 

Protected person dies. In their position do they have some time period to 

get things finalized and report to the court? If so, are they still able to sign 

checks, etc.? 

Answer: As we mentioned in the presentation, this is a question of state 

law. Your state's Probate Code may permit an orderly "winding down" of the 

decedent's affairs, or it may not. Check with counsel. 

Account Status and Re-titling 

27. Question: How long can a decedent account stay open? Individual 

accounts? Joint accounts-Primary is the decedent-use the Social Security 

No. for tax purposes Secondary is the decedent- not use SSN for Tax 

purpose 

Answer: Because of the legal process that is required before an estate 

account can be opened (in the case of sole owner accounts), there will be 

some period during which those accounts will be "in limbo." As for joint 

accounts on which you know one owner has died, your bank should have a 

policy calling for follow-up within a specified time frame. From a legal and 

tax perspective, the ideal would be to make all changes immediately after 

the death. From a practical (and compassionate) perspective, that just won't 

work in almost all cases. The best approach is probably to work with the 

survivor in a sensitive transition. 

28. Question: What if survivor refuses to switch over an account to their name 

and provide a SSN who is responsible, in the end for switching over the 

account? 

Answer: This seems rather far fetched, but we suppose anything is 

possible. The bank should either make the changes or order the account 

closed. 

29. Question: When the account owner dies, is flagging the account sufficient 

or should the title of the account be changed to include 'deceased'? 


Answer: We believe you should take whatever steps are necessary in your 

bank's operating environment to protect the account from being misused. If 

simply flagging it is sufficient, that's fine. 

30. Question: We allow our customers to re-title accounts following a death 

instead of closing it. Is this OK? 

Answer: Re-titling is less objectionable in the case of joint accounts, I 

think. With POD and ITF accounts, however, the case is stronger for closing 

out and transferring to a new account once the sole owner has died. 

31. Question: What do you recommend if we have a request from a customer 

to revise their account after one of the owners is deceased, but they want to 

leave the deceased person's name in the account styling because they 

want their mail to come with both names? Would it be prudent to revise the 

account with only the surviving owner's name and flag our records so the 

statement would still have the deceased name on it? 

Answer: Problems can arise when bank statements don't reflect the true 

ownership of an account. Although one might be tempted to say "Where's 

the harm?" in this arrangement, we don't recommend it. While we are 

mindful of the need to be sensitive to your customer’s feelings in the wake 

of the death of the joint account owner, the simple fact is that the deceased 

person no longer has any ownership interest in the account and you should 

not provide assistance in perpetuating the myth that he/she does. 

32. Question: Should we freeze joint accounts when one of the joint customers 

passes away or do this only on sole owner accounts? 

Answer: Unless your state law requires that a joint account be frozen 

pending a release from the state (this is increasingly rare), we don't 

recommend freezing the account. 

33. Question: What if an account is set up as joint-- Example: Mother Doe & 

Daughter Doe -- Mother Dies and Son Doe comes in says he is the 

appointed Administrator of the estate -- what if joint owner daughter says no 

you can not close the account because I'm the joint owner -- but then the 

bank finds that they already let the administrator close the account - is it just 

whoever came to the bank to close it first? 

Answer: The administrator had no legal access to the account that was 

joint with Daughter Doe. The bank had no authority to pay the account to 

Son Doe, and should immediately contact counsel to help it deal with the 

likely suit to recover the funds. 

34. Question: If the account is jointly held and the first-named owner (the one 

on whose social security number interest has been reported), should the 

interest now be reported under the joint owner's name and social? If so, do 

they need to be notified? 


Answer: Absolutely yes. That person is now the owner of the account and 

receives the interest. Actually, the survivor has been receiving the interest 

all along (as part of the joint account balance), but reporting happened to be 

under the decedent's number. You have no legal obligation to notify the 

survivor of the change in reporting, but you might consider it a customer 

relations practice. 

Trusts 

35. Question: Can an executrix handle accounts for the Decedent in trust for 

someone else? 

Answer: No. A trust is a legal entity separate from the individual that 

happens to be the trustee. On the death of the trustee, the terms of the trust 

will control what happens to the trust and its assets. This is totally separate 

from the estate of the deceased. 

36. Question: Since some customers are very sensitive about providing a 

copy of the trust instrument, we have, in several instances, accepted a letter 

from the Trustor's attorney that specifies successor trustees, action and 

dissolution upon death of the Trustor, etc. Is this an acceptable practice? 

Answer: That practice is gaining in acceptance, and is even mandated in 

some states. There is a formal document, known as a Memorandum of 

Trust or Certificate of Trust that is completed by the trustee. It sets forth the 

salient facts about the trust and gives a financial institution precisely the 

information they need to effectively handle the account. 

37. Question: The probated will of a customer specifies that a trust be set up 

after his death. What documents do we need, Letter of Testamentary, copy 

of the will? 

Answer: A testamentary trust is a trust established under a will. By its very 

nature, it is designed to take effect only upon the death of the grantor. The 

trust is established under the will, and it sets forth information about who the 

trustee will be and what their powers and duties are. To properly set up an 

account for such a trust, you will need to get copies of the court papers 

showing that the will was accepted for probate, a copy of the trust, and any 

order from the probate court that affects the trust and sets it in motion. 

Dealing with Estates 

38. Question: We do NOT allow for required multiple signers on an account. 

Can we refuse to open the estate account and issue a cashiers check to the 

estate? 

Answer: You can always refuse to open an account. Before doing so, 

determine whether your state allows co-executors to appoint one another as 

agent or otherwise make the requirement for two signatures easier to live 


with. Also consider that many if not most estate accounts have little activity, 

and special handling for such an account may be worth the trouble in order 

to keep the balances. 

39. Question: We were under the impression that the individual TIN could be 

used through the current tax year. No? 

Answer: The IRS allows a final tax return to be filed in the name of the 

deceased using the deceased's SSN. However, this does not permit other 

use of the deceased individual's TIN. The estate must get its own number. 

40. Question: What type of a form does the court supply to prove that the will 

has accepted by the court? 

Answer: This varies from state to state. Ask the local probate court for an 

example. 

41. Question: In the webinar, it was mentioned that a check made out to a 

decedent should only be deposited into an estate account or the decedent's 

account. If an executor or administrator has been appointed, it is their duty 

to disburse the funds according to the will. If that representative endorses 

the check properly, why should the bank monitor where the funds are being 

deposited? If the executor endorses as the executor of the estate, isn't it 

OK to deposit to his account and make distributions from there? 

Answer: It's never appropriate for a fiduciary such as an executor to 

deposit funds meant for the estate into his own account, regardless of 

motive. The bank bears the risk of the funds getting misappropriated by the 

executor and the fact that it allowed the money to be deposited to the wrong 

account put the bank on notice of the fiduciary's having gone astray. 

42. Question: We had a situation where our customer died, and an executor 

came in with letters of office, death certificate, etc. All the paperwork was in 

order so the account was changed to an estate account and disbursed 

according to the will. Six months after the account closed out, another 

person came in with letters of office and the death certificate saying that he 

was the executor, but the estate was already settled by the first executor. 

What is the bank's liability in a situation like this? 

Answer: First, contact your own counsel. He or she will probably contact 

the probate court for more information. Assuming that the first set of 

documents was legitimate, it's likely your bank will not have any liability 

here. 

43. Question: If co-executors are both placed on the estate account without 

dual signatures required, must we request indemnity for any losses caused 

by one of the executors and are the executors on the estate account 

authorized signers? 


Answer: You may wish to obtain an indemnity agreement such as you 

describe. We don't believe it is required, however. As for your second 

question, the estate is your customer and owns the funds., The executors 

are the representatives of the estate and, as such, authorized signers on 

the account. 

44. Question: What documentation should we receive from the personal 

representative or the law firm if a personal representative has been named 

and engages a law firm to actually "do" the work? Is there a form the 

personal representative signs to appoint or engage the firm? 

Answer: We are not aware of any standard for such an appointment. It 

would be prudent to ask the personal representative to sign a statement or 

letter indicating that the firm has been engaged. 

45. Question: What do you do about property that is discovered after an estate 

is settled? 

Answer: That is a matter for the personal representative of the estate to 

worry about. He or she will have to determine the proper course of action 

from the probate court. 

46. Question: How do I handle estate checks presented by the PR or 

Beneficiary for deposit after the estate account has been settled and 

closed? 

Answer: Verify that the personal representative's authority is still valid. You 

may then reopen the account for the purpose of completing the transaction. 

Agents, Attorneys-in-Fact, Deputies, etc. 

47. Question: Can an agent have the money from a decedents account 

transferred to a new account in the agents name only? 

Answer: The agent's authority to do anything with the account ceased as 

of the moment of death. Even before that event, it would be improper for an 

agent to make such a transfer except in payment for money due the agent 

as an individual (wages, fees, etc.) 

48. Question: Deputies are allowed to enter a decedent's safe deposit box 

under amended statute G.S.28A-15-13(a) signed on 6/26/2003 

Answer: Your reference is to North Carolina law and will affect only banks 

in that state. The section appears to deal only with the opening of a box for 

the purposes of inventory, and includes requirements for the disposition of 

an instrument appearing to be of a testamentary nature. A deputy is one of 

the persons in North Carolina qualified to enter the box and complete the 

inventory. There appears to be nothing in this section of the NC General 


Statutes (Section 28A-15-13) that permits a deputy to enter the box for any 

other purpose post mortem. 

49. Question: On a personal account, does authorized signers' authority 

terminate at time of death, as it does for a sole proprietor's account? 

Answer: Yes. 

POD Accounts, Totten Trusts 

50. Question: Does a Totten trust need its own EIN? 

Answer: No. A Totten trust is considered the property of the trustee(s) until 

revoked or the last trustee has died. You should obtain and use the SSN of 

the owner(s) as you would for any other individual or joint account. 

51. Question: The personal rep on an estate account died. The PR also had 

personal accounts with POD on file. Do we make the POD aware of the 

estate account as well? 

Answer: No. The beneficiary of the POD designation only has an interest in 

the account(s) naming the beneficiary. Any money that goes to the estate is 

none of his/her business. 

52. Question: POD accounts: An account has a specific beneficiary named 

on it and has been opened for five years. The will of the owner dated after 

the opening date of the account talks about the specific account and names 

a different beneficiary, who gets the money? 

Answer: In most states, the bank is protected if it follows the account 

designation, and the squabble will be between the estate and the POD 

beneficiary. If the bank is in doubt about the ownership of the funds, it can 

ask the probate court to intervene. 

53. Question: If someone is a POD beneficiary, at time of sole owner's death, 

is the beneficiary allowed access to the account information? 

Answer: Ownership in the account did not vest in the beneficiary until the 

benefactor's death. We don't believe the beneficiary has any right of access 

to the account records except from date of death forward. 

54. Question: When trustee dies, how should the check to the beneficiary be 

titled? Just to the name of the beneficiary or name of beneficiary of the 

account of the trustee? 

Answer: In such an account, ownership passes at the time of death of the 

trustee. Make the check payable to the beneficiary. 


55. Question: We are getting more and more requests to put beneficiaries on 

deposit accounts (primarily time deposits). In Michigan we have not 

recognized POD, but utilize ITF (in trust for) as an informal trust which gives 

ownership to the recipient upon death of the account owners. 

What is our liability if we have multiple recipients? Does the bank have to 

divide the money or are we simply responsible for any one of the recipients 

to receive the funds? 

Answer: Ask counsel to provide you with background on Michigan's 

treatment of these informal trusts. There may be specific rules, and the 

state may not recognize them if more than one beneficiary is named on an 

account. If multiple beneficiaries are involved, it's never advisable to 

transfer the entire balance to only one of them. 

56. Question: Is the POD account balance included in the determining the 

value of the estate and the Federal tax on an estate? If so, then do we 

need to give info to the executor? 

Answer: Unfortunately, this is a question best answered by a tax attorney 

or CPA. If the attorney for the estate can cite chapter and verse from the 

IRS statutes or regulations supporting a contention that the POD account 

balance must be included in determining the value of the estate for federal 

estate tax purposes, you could release the balance information. 

57. Question: What is the difference between POD and beneficiary? 

Answer: "POD" is a shorthand designation of the owner's intent to transfer 

property (the account) to a named party upon the owner's death. The 

named party is the beneficiary. "Beneficiary" is a term that can apply to any 

party that receives a benefit. It can include the recipient of an account 

designated with a "POD" or "ITF," or of insurance proceeds, or any other 

benefit. 

58. Question: How should we handle an account when the primary owner dies 

and the POD is a minor? 

Answer: Treat this as you would any request to open an account in the 

name of a minor. If you know, at the time of opening the account, that the 

POD beneficiary is a minor, we strongly urge you to consider 

recommending to the customer that the POD beneficiary be set up as a 

UTMA account for the minor. In other words, If Jan wanted her son, little 

Bobby, to be her POD beneficiary and he is two years old, she could 

designate as POD: “Litle Bobby, a minor, by Big Bobby, Custodian, under 

the Uniform Transfers to Minors Act.” The beauty of such aset-up is that 

you would immediately have someone who could deal with the funds (the 

adult custodian), plus the UTMA statutes require that the funds be used 

exclusively for the use and benefit of the minor, so the person designating 


the minor as a POD beneficiary can feel confident (if they choose the 

custodian wisely) that the minor will truly benefit. 

59. Question: Should you set up a POD on all accounts? 

Answer: We're not sure of what you are asking. Not all accounts will have 

POD designations simply because the owners want other rules (joint 

tenancy or estate rules) to determine how their assets are handled. If your 

question is whether a bank can allow a POD designation on any type of 

account, we see no reason to deny POD designation for personal accounts 

of all types except for IRA accounts (which are handled differently). 

If what you’re asking is whether al personal accounts should have a POD 

named, our feeling is that all individuals opening an account should at least 

be told of the option to set up a POD beneficiary or a Totten Trust. 

Remember: you are the expert, when it comes to new accounts. There are 

many things (such as the POD or Totten Trust option) that you take for 

granted, but that customers would not necessarily even know about. You 

can perform a much-needed service by telling them about how the funds in 

the account could avoid probate. 

60. Question: If an account with a POD is closed, the POD is changed or 

revoked, how long should we keep the POD beneficiary designation? 

Answer: Retain the documentation for the same interval you would use for 

other account documentation such as signature cards. 

61. Question: Is it recommended that the bank obtain a W-9 from the 

beneficiary before the payout? 

Answer: If the beneficiary will use the proceeds to open an account with 

your bank, yes. Otherwise, it's probably a useless exercise. A W-9 does 

nothing to assist you in confirming the identity of the beneficiary before 

distribution. 

62. Question: If a trust account is under the social security # of a trustee that 

dies, do we need to close the account? Can the trust continue under that 

tax ID? How long does the remaining trustee have to change things over? 

Answer: We're assuming you are referring to an informal or Totten trust 

with multiple owners (trustees). Treat this just like any other joint account 

and get the information updated as soon as possible. The SSN of the 

decedent should not continue to be associated with the account. 

63. Question: What are your thoughts on closing the POD account, cutting 

cashier’s checks for the beneficiaries and waiting for the beneficiaries to 

claim them? Or should we keep the funds in the restricted account and 

distribute them? 


Answer: We don't think that removing the funds from the account in this 

way is wise. It might even make your handling of abandoned property more 

complicated. 

64. Question: When do we stop paying interest, the date of death or date of 

POD presentation? 

Answer: When you pay the account over to the beneficiary. At that time, 

replace the SSN of the deceased with the SSN of the beneficiary on your 

records so that interest is taxed on the beneficiary's record. You may have 

to find a way to issue two separate 1099-INT forms, and remember that 

interest earned after the date of death should not be reported under the 

deceased customer's name or SSN. 

65. Question: If there is a POD on an account, can the account information be 

submitted to a Personal Representative? 

Answer: At the time of death, accounts designated as POD cease to be 

connected to the estate of the deceased. The estate has no legal interest in 

them, and should not be provided information about them. 

Checks payable to deceased or estate 

66. Question: Do we need to have checks payable to the deceased reissued 

payable to the estate? 

Answer: Not necessarily. In many cases, the checks can routinely be 

deposited to the estate's account with proper indorsement. There are 

certain types of checks, however, that should be returned for a 

determination. Among these are any payment from an annuity (these often 

have language on them requiring that the payee be living at the time of 

negotiation), and Treasury checks for recurring payments. 

67. Question: What about checks payable to the decedent and another person. 

How do we handle them? 

Answer: If the estate can negotiate the type of check in question, obtain 

the indorsement of the estate and the other payee, and process these 

checks as you would others payable to multiple payees. 

68. Question: On a joint account, a check is presented that demands two 

signatures and one of the payees is deceased. What is acceptable for 

deposit? 

Answer: If the check is of a type that can be negotiated by the estate of the 

deceased, obtain the indorsements of the personal representative and the 

other payee. The check can then be negotiated. 


69. Question: Is it OK to deposit checks dated before date of death? 

Answer: That depends on the check and to which account you'd like to 

deposit it. If the check is payable to the deceased only, you may be able to 

deposit it to an account in the name of the deceased only, or to the estate 

account. Remember that certain checks require that the payee be alive to 

endorse them, and Treasury checks cannot be deposited to the decedent's 

account regardless of date. Recurring payments from Treasury must be 

returned to the certifying agency for possible reissue; non recurring 

payments can be deposited, if properly indorsed, to an estate account. 

70. Question: Slide 21, if a check is made payable to the decedent's estate 

can it be deposited into the estate account OR the sole owned decedent 

account? 

Answer: If the check is payable to the estate, it CANNOT be deposited to 

the account of the decedent. That account should be transferred to the 

control of the estate. 

71. Question: How do we handle a check for deposit if our customer does not 

have a sole ownership account? 

Answer: Depending on the type of check involved, it may be negotiated to 

the account of the decedent's estate. Otherwise, it should be refused for 

deposit, and returned to the issuer for a determination. 

Payments after Death under UCC 4-405 

72. Question: Slide 31, 10 days for payment after date of death - what if a 

check comes in to the account 20 days later that was written prior to the 

death, do we pay it or does the 10-day rule address this? 

Answer: If you have knowledge of the date of death, the 10-day rule would 

prevent you from paying a check that is presented more than 10 days after 

the date of death. 

73. Question: While UCC 4-405 allows payments for up to 10 days after 

death, is there any prohibition against allowing payments AFTER 10 days? 

Answer: Checks presented after the end of the 10-day period, assuming 

the bank has knowledge of the date of death, are not properly payable. If 

the bank knowingly pays a check presented after the 10-day period, it could 

be liable (presumably to the estate or creditors of the estate) for the amount 

of that payment. 

74. Question: Is the 10 days for paying checks after date of death according to 

the UCC, 10 business days or 10 calendar days? 

Answer: Calendar days. 


Miscellaneous 

75. Question: When the Financial Institution is notified that a member has 

passed, you send letters and you receive no response. What is the next 

step? 

Answer: Start by making sure accounts are flagged so that someone is 

alerted of any activity. That will help develop a point of contact if someone 

starts trying to access the account (or prevent a fraud). Then you can't do 

much other than wait for something to happen or your state's abandoned 

property law to take over. If your state allows it, you can consider 

escheating the account early, and moving the problem out of the bank. 

76. Question: Can you stil send "Notice of Decedent Account Status” to the 

state (when you have not received death certificate) and you know the joint 

owner is not the spouse? 

Answer: This is a state-specific issue. Our Google search suggests that it 

applies only to Pennsylvania. We suggest you contact the Pennsylvania 

Department of Revenue for further information. 

77. Question: Where can a financial institution find compliance 

documents/resources to find answers to any situation that may come up? 

Answer: There are hundreds of resources available at or through 

www.Bankersonline.com. 

78. Question: Will the session go over inheritance tax and estate tax? 

Answer: We did not include the question of taxes in our discussion. 

79. Question: What information is available on the SSA Master Death Index? 

Answer: Searching on either name or SSN, the site at 

http://ssdi.rootsweb.com/cgi-bin/ssdi.cgi provides Name, SSN, Date of Birth, 

Date of Death, Last Residence, and the state of issuance of the SSN. Of 

course, it only provides this information on persons who have been added 

to the Death Index. 

80. Question: How reliable is the information from the Social Security Master 

Death Index? Can we use it in lieu of a death certificate if our state is slow 

in issuing them? 

Answer: SSA creates its Master Death Index from data supplied by other 

parties. Use it as a tool, but never accept it as definitive evidence of death. 

81. Question: If a decedent was a resident of one state and the bank is 

headquartered in another state, which state's rules apply? 


Answer: The bank’s contracts with the customer are likely to have a 

“choice of law” provision that indicates which state’s law is to apply. 

Typically, it would be the law of the state in which the bank is located. Of 

course, estate matters and jurisdiction would be tied to the state of the 

customer’s residence at the time of the customer’s demise. 

82. Question: We are an internet bank. Which state regulations do we need 

to follow, the customer's state or the banks location? 

Answer: Pull out your contracts. Since your institution wrote them (or had 

them writen), we would bet they’re writen to designate your state’s law wil 

govern, since that would be in your institution’s best interests. 

83. Question: Is NCUA applying the same insurance rules to the estate 

accounts? 

Answer: The NCUA rules are distinct from FDIC rules. We have reviewed 

the NCUA rules and they appear to be substantially the same. However, 

you should contact either the FDIC or NCUA for a definitive answer to any 

question about the applicability of deposit insurance rules. 

84. Question: What is CIP? 

Answer: Customer Identification Program, a program that all depository 

institutions are required to have adopted at the board level. The CIP is 

required by section 326 of the USA PATRIOT Act and 31 CFR 103.121. 

85. Question: If a bank customer has deposit accounts as well as loans can 

we offset the owed amount on the loans with the deposit accounts? 

Answer: Check with counsel on this. State laws are likely to affect your 

ability to do it. You may have to enter a claim against the estate and wait. 

86. Question: Will the funds pass outside of probate if the joint tenants are a 

parent and a child as opposed to a husband and wife? 

Answer: A familial relationship isn't normally required, but check with 

counsel to determine if there are any specific restrictions in your state. 

87. Question: We established an estate account in 1999; however, we have 

now discovered that the primary is not deceased and the account should 

have been set up with co-conservators. Is it appropriate now to change the 

title of the account? 

Answer: Absolutely. Retrieve the documentation copies you have and get 

new account forms signed by the conservators with the appropriate account 

captioning. 


88. Question: One of the joint filers dies. Is the survivor allowed to deposit a 

tax refund check payable jointly, or must the check be returned for reissue? 

Answer: It should be returned to be reissued, since it is made payable 

jointly and one of the joint payees no longer has the capacity to indorse it. 

89. Question: Any guidance or suggestions regarding UTMA accounts when 

the child dies? 

Answer: The custodian of the account should arrange for its transfer to the 

estate of the minor. 

90. Question: What are four states that still have to do inventory of safe 

deposit box contents? 

Answer: We’re trying to pin that down for you. NOTE: If any of you are in 

such a state, please let us know. We believe that Pennsylvania is one of 

them. 

91. Question: What if a church had a safe deposit box and all the owners 

passed away. Then new members come in to enter the box. What would 

be required to provide them access? 

Answer: If the church is a corporation, treat it accordingly. If it is a "group" 

or association, you should have a process for changing authorized signers 

on accounts and on safe deposit boxes in such cases. At a minimum, you 

need to satisfy yourself that the persons presenting themselves are 

authorized to act on behalf of the church. 

92. Question: Are there any specific procedures to handle the collection of 

loans from deceased customers? 

Answer: Your collection department should develop a working knowledge 

of the process of probate in your state, and determine the method for filing 

claims against estates. Basically, the debt becomes an obligation of the 

estate, assuming there was no credit life insurance. If no heirs or devisees 

initiate a probate, a creditor can do so in order to have a formal process for 

making a claim against the assets of the estate. 

93. How can we go about protecting the bank's interests when a loan customer 

passes away out of state but payments are still being made during the time 

frame when the estate is being settled? After the estate was settled, the 

person that was making those payments was no longer able to do so. 

Answer: When the bank becomes aware of the death of its borrower, it 

should plan to file a claim against the estate, regardless of who might be 

making payments, or the status of those payments. There is a "window" 

during which the claim may be made; once the window closes, the bank's 

ability to enter the claim is foreclosed. 


94. Question: Member is deceased and holds an IRA with no beneficiary. 

Unable to locate anyone to move money into an estate. What do you do? 

Answer: Follow the abandoned property laws in your state. When a 

customer fails to make arrangements in advance for the contingency of his 

death, it does not become your obligation to try to “fix” his lack of foresight. 

Just hold tight until either you receive a court order directing what should be 

done with the funds, or the period of presumed abandonment finishes 

running and you can report the funds as unclaimed property. 

95. Question: We have 24-hour access safe deposit boxes at our grocery 

store branches. The customer is the only one who has access to these 

boxes. Any comments on handling these when the owner dies? Should we 

drill immediately? We do not have the ability to plug the box. We know there 

is not an estate established. Comments? We are in Iowa. 

Answer: You should review Section 524.810A of the Iowa Code. It sets out 

the requirements for post mortem access to a safe deposit box. Interestingly 

enough, it provides for a rental contract provision in which the lessee names 

a person who may access the box upon the lessee's death. 

96. Question: What are the rules on redeeming Savings Bonds when the 

customer dies? 

Answer: Check out the information on the Bureau of the Public Debt's web 

site here: http://www.publicdebt.treas.gov/sav/savdies.htm. It's likely you 

should submit the bonds and documentation to the appropriate Federal 

Reserve Bank office for redemption. 

97. Question: How would I find out if Texas has a small estate provision? 

Answer: You can review Texas state laws, consult with counsel, or ask the 

Texas Bankers Association. 

98. Question: On the issues you indicated were governed by state statute, 

where would we get information as to what Texas statutes require? 

Answer: See the previous question. 

99. Question: Is it advisable to trust a "person search" web site such as Acurint 

to verify the date of death of a customer? 

Answer: The only legally-accepted record is the official record in the 

jurisdiction where the death took place. Other sources can be excellent 

tools, but you can't rely on them to protect you if the information is 

inaccurate. 


100. Question: When Letters of Administration state that they pertain to a 

specific account, for example, savings account number XXXX, how do we 

handle this? Do we make the check payable to the estate, to the 

administrator? Also, can the administrator named open an estate account 

using the letters of administration? 

Answer: If you receive a certified copy of Letters of Administration from a 

court indicating they pertain to a specific account, the person named as the 

Administrator in connection with the Letters of Administration will have the 

authority to access that account and disburse the proceeds according to the 

court directives. When there is a will, you will typically see a court document 

labeled “Leters Testamentary.” When an individual dies without a will, most 

court issue an order labeled “Leters of Administration.” The administrator, 

in such a case, would be the official personal representative of the estate, 

and that is whom you would deal with.

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