Burial Reserve Account Holder Dies, How are the Funds to be Disbursed?
Question: When a burial reserve account is established for a person, there is no funeral home named when the account holder dies, and there is no administrator or executor appointed, and evidently no estate and no one to be appointed, how are the funds to be disbursed? If there is a funeral director named and there is more money in the account than the funeral costs, how are the excess funds to be disbursed? Does the whole balance of the account go to the funeral director, or just the amount of the invoice with a separate check payable to the estate, or to whomever? We're having a problem with these, and it seems there are more of this type account being opened all the time.
Answer: Let's start with the first part of the question. In many states there is a cut-off amount that can be disbursed from a decedent's regular account without letters of administration. In that case you might be asked to close out the account by making the check payable to the survivors of the decedent along with the funeral director. This can be done, in most cases, without the account being a burial reserve agreement account, though you still need a copy of the funeral bill and a death certificate. You might want to check first with the Department of Banking in your state to find out what that amount is. In Pennsylvania, for instance, it's $3,500.
A burial reserve account, however, could be more than that amount, and still not require letters of administration. If the funeral home is named, there should be no problem about payee. Upon delivery of the death certificate, the balance of the account will go into a check payable to the funeral director/ home. We used to incorporate those instructions right in the title of the account - "Jane Doe - Burial Reserve Account - Funds to be paid to Sunset Funeral Home", upon presentation of death certificate." In this case the cost of the funeral has been set and agreed upon ahead of time, and the entire balance of the account is part of the agreement.
If there is no funeral home named, then there is no agreement of price or funeral establishment. In this case, the title of the account simply eliminates the name of the funeral home, very often simply reading "Jane Doe, Burial Reserve Account." In this case, you'll have to deal with Jane Doe's survivors. You'll want a death certificate and a funeral bill for your files. The funeral home's invoice will be made out to the person responsible for paying the bill. That person's name should appear on the check along with the funeral home's name. So the check will read, "Sunset Funeral Home AND John Doe, Survivor, for the funeral of Jane Doe, Deceased." Both John and the Funeral Director will have to endorse the check in order to make it negotiable.
You won't find the balance of the account exceeds the amount of the funeral bill in too many instances. If in fact it does, the whole balance of the account still goes into the check, closing the account. Funeral directors are accustomed to remitting any left over funds to the family, and will do so as a matter of business. It is not your problem to decide who should receive any left over funds.
I know we can't 'officially' put a stop payment on a cashier's or teller's check. But there are times when we know there is fraud involved, or that a check has been replaced and now the original is being presented, or even when the 90 days has gone by, the replacement issued, the indemnification affidavit is on file, and here comes the original check in for payment. What reason do we put on it for return?
Too many times I've seen "Stop Payment" stamped on these returned checks, and you're right - that is totally incorrect. You can't 'stop' an official check. You can, however, refuse to pay it - and that's what you should stamp it…"Payment Refused."
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