Tax Refund Check Payable to Deceased Person

Can a surviving spouse deposit a tax refund check that is payable jointly to him and his deceased wife?

no, because it can't be properly endorsed.

"But then again, who will file a forged endorsement affidavit?", he says with tongue firmly planted in cheek.

I've not seen anything directly on point; however, the IRS does expressly permit a surviving spouse to sign a joint tax return provided no representative has been appointed by the courts. The would sign: "John Smith for Mary Smith, decesased" and the word "Deceased" along with the date of death need to be written at the top of the return. (See tax topic 356 on www.irs.gov)

It would seem logical for them to allow the same on the endorsement but we are talking about the IRS so logic might not be an issue.

Once the check is issued, it is no longer an IRS matter. Checks are issued by the Financial Management Service, of the Fiscal Service, of the Department of the Treasury. The governing regulation is "Indorsement and Payment of Checks Drawn on the United States Treasury," 31 CFR Part 240.

Interestingly enough, FMS says nothing about jointly payable checks in this regulation. However, it does have a rule on checks payable to deceased persons. It's in §240.15.

• If an executor or administrator has been appointed under applicable state law, the executor or administrator may endorse the check, indicating the capacity in which the executor or administrator is acting, and including his/her signature. The bank should obtain and retain documentation of the death of the payee and the appointment of the executor or administrator.
  
• If no executor or administrator has been appointed, the check should be returned to the IRS for a determination as to "whether, under applicable law, payment is due and to whom it may be made." (240.15(b))
  

I've included the parts of the regulation that would address a tax refund check. Different rules would apply for recurring payments, such as social security or annuity payments.

As noted, a surviving spouse cannot supply the decedent's signature. A properly appointed personal representative of a decedent's estate could sign in that capacity. That's probably the easiest, safest way to assure that the money goes where it is supposed to go.

I looked at the FMS and IRS web sites and found nothing on point, so I called the IRS Helpline which is (according to GAO) correct about 76% of the time. They said the surviving spouse should mail the check back to the regional office where the return was filed along with a letter of explanation, proof of death, and a request that IRS to reissue the check in the name of the survivor. I'm pretty certain this is in the 24% category; i.e. we might be talking about a $400 check or a $40,000 check and the personal representative might take a dim view of the IRS declaring a right of survivorship in the latter.

This post went up before I saw John's, but I decided to leave it in place...

A minor correction to John's post, the section is 240.14 vs. .15....no doubt a typo.

Sorry, Jim, but I ducked this bullet. Treasury issued a revised interim rule in the 10/19/2004 Federal Register (LINK) that added a section about "Electronic Checks and Substitute Checks" at 240.3, bumping up the section numbers on the rest of the regulation.

The cite of §240.15 stands.

John, I stand corrected. A reminder to myself (and others) not to rely completely on the GPO web site for the Code of Federal Regulations. I do recall, now, the Federal Register item.

How do you know he's dead? Small town bank?
Unless the spouse was estranged, most states transfer property to the surviving spouse, even without a will anyway, so why make her jump through hoops. Don't you think she's going through enough right now?

Dear Anonymous, your choice of language is not appropriate for a professional forum and topic. The logic of your argument is flawed as well. The customer isn't dealing with the state, she's dealing with the federal government. It is much better to handle this correctly the first time than to cause her additional pain when they come back years later demanding the funds because it wasn't handled according to their rules. We've had that happen to a customer recently. She doesn't need to be put through the pain of re-living everything once she begins healing from this loss.

Quote:

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...most states transfer property to the surviving spouse, even without a will anyway,

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Some states have a procedure to dispense with administration and pass a small estate to the heirs with no formalities. Most don't. Those that do don't bestow permission to cash checks payable to a decedent.