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January 6, 2015
Business Accounts Documentation and Procedures with Beneficial Ownership
Deborah Crawford

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#1472435 - 11/24/10 12:28 PM Reclamation of Social Security deposit
CEW Offline
100 Club

Registered: 02/07/05
Posts: 122
Loc: Nebraska
One of our customers passed away on 11-18-2010. Her social security direct deposit is posting to her account today. I called our local social security office and was told the money is NOT subject to reclamation since the payment is for the month of October, 2010.

However, some of our employees recently attended a seminar where they were instructed to return ANY payment received ON or AFTER the date of death.

Any one willing to clarify which response is accurate?

Thank you!

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Deposits and Payments
#1472461 - 11/24/10 12:48 PM Re: Reclamation of Social Security deposit [Re: CEW]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17577
Loc: Another trip around the sun
The telephone advice you received is consistent with what is found on the SSA web site:

Q: If a person receives a Social Security Check and then dies before cashing, must the check be returned?

A: Social Security benefits are not paid for the month in which an individual dies. Example: An individual receives a Social Security check in June for the month of May, and dies after the receipt of that payment. The individual would be entitled to the check received in June (May's payment) because the individual lived throughout the month of May. However, the check issued in July (for the month of June) would have to be returned to Social Security because the individual did not live throughout the month of June.
_________________________
"Oh God, thy sea is so great and my boat is so small." Breton fisherman's prayer in JFK's office.

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#1472485 - 11/24/10 01:05 PM Re: Reclamation of Social Security deposit [Re: Ken_Pegasus]
madukes Offline
Diamond Poster

Registered: 07/17/09
Posts: 1177
Loc: Flyers Country
in simple terms, the person has to live through the entire month. If they die on the 31st of October then the payment received in November must be returned. If they die on November 1, then the payment received in November is ok.

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#1472521 - 11/24/10 01:52 PM Re: Reclamation of Social Security deposit [Re: madukes]
CEW Offline
100 Club

Registered: 02/07/05
Posts: 122
Loc: Nebraska
Thank you!!

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#1472605 - 11/24/10 03:25 PM Re: Reclamation of Social Security deposit [Re: CEW]
dcl1963 Offline
100 Club

Registered: 02/28/06
Posts: 177
Loc: LA
You already have your answers, but we operate as madukes stated and have been fine.
_________________________
In God we trust, all others pay cash. . . Jean Shepherd

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#1473050 - 11/27/10 08:49 AM Re: Reclamation of Social Security deposit [Re: dcl1963]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 30979
Loc: Cape Cod
There could be confusion with rules covering SSA payments by check. For Treasury checks received after the payee's death, Treasury regs call for the return of the check to the approving agency for a determination of whether the payment is to be completed, and to what payee. Of course, with a check, there is the presumption that the payee can't negotiate it if he or she isn't alive when the check arrives.
_________________________
John S Burnett
BankersOnline.com

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#1473053 - 11/27/10 11:48 AM Re: Reclamation of Social Security deposit [Re: John Burnett]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17577
Loc: Another trip around the sun
I copied that Q&A from an old manual. I can't find it on the SSA web site now, but an excerpt from their current 05-10008 indicates they want both checks and electronic payments received after the date of death returned:

If the deceased was receiving Social Security benefits, you must return the benefit received for the month of death or any later months. For example, if the person dies in July, you must return the benefit paid in August. If benefits were paid by direct deposit, contact the bank or other financial institution. Request that any funds received for the month of death or later be returned to Social Security. If the benefits were paid by check, do not cash any checks received for the month in which the person dies or later. Return the checks to Social Security as soon as possible.

Emphasis supplied. As you indicate, if the decedent was entitled to the last payment, they want to decide who who it should be paid to after her death in accordance with their regulations. They give the same direction whether the payment is electronic or by check.
_________________________
"Oh God, thy sea is so great and my boat is so small." Breton fisherman's prayer in JFK's office.

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#1519502 - 03/09/11 01:48 PM Re: Reclamation of Social Security deposit [Re: Ken_Pegasus]
OhMyStars Offline
Member

Registered: 11/08/10
Posts: 53
Loc: Midwest
I am bringing this thread to life again as I am dealing with a similar situation. Hoping for some guidance. Thank you in advance.

The problem is: mother/daughter had a checking account. Mother passed away. Mother's post-death Treasury benefits were received into checking account which daughter in turn pulled the funds and closed the account. Bank was notified by government that daughter was not entitled to funds and must be returned. Daughter stated to us that the funds were spent and could not re-pay.

I am told that we are not able to send outstanding Treasury reclamations to collections. Can we take some type of collection action against the daughter?
_________________________
CRCM

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#1519514 - 03/09/11 01:57 PM Re: Reclamation of Social Security deposit [Re: OhMyStars]
madukes Offline
Diamond Poster

Registered: 07/17/09
Posts: 1177
Loc: Flyers Country
Originally Posted By: OhMyStars
I am bringing this thread to life again as I am dealing with a similar situation. Hoping for some guidance. Thank you in advance.

The problem is: mother/daughter had a checking account. Mother passed away. Mother's post-death Treasury benefits were received into checking account which daughter in turn pulled the funds and closed the account. Bank was notified by government that daughter was not entitled to funds and must be returned. Daughter stated to us that the funds were spent and could not re-pay.

I am told that we are not able to send outstanding Treasury reclamations to collections. Can we take some type of collection action against the daughter?


That is a good question. I have not had that experience yet (thank God). If the funds are no longer at your institution aren't you supposed to advise Treasury who received the funds and leave it up to them to try and collect? Since my posting above I have learned that we now return ALL SS direct deposits that post after the date of death. Treasury then determines if the payee is/was entitled to the money and pays it out if necessary.

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#1519537 - 03/09/11 02:14 PM Re: Reclamation of Social Security deposit [Re: madukes]
OhMyStars Offline
Member

Registered: 11/08/10
Posts: 53
Loc: Midwest
I don't think so.
From the Green Book:

Federal Agency Collection from Withdrawers

If all or part of the post-death payments have been withdrawn from the account before the RDFI learns of the death, and the RDFI properly responds to the Reclamation and is qualified to limit its liability, the authorizing federal agency will then attempt to collect the outstanding total from the withdrawer(s).

If the authorizing federal agency is unsuccessful in collecting all of the outstanding total from the withdrawer(s), the RDFI's remaining liability (the 45-day amount) will be collected by debiting the RDFI's or its correspondent's Federal Reserve account.

Debit of the RDFI's Account (FMS-135)

If the RDFI fails to respond completely and accurately to a Notice of Reclamation by the due date, the Government Disbursing Office will send the Request for Debit (FMS-135) to the Federal Reserve to debit the RDFI's Federal Reserve or its correspondent account for the full amount of its outstanding liability. This debit action is final.

The table below shows when the authorizing federal agency can exercise its authority to have an RDFI's Federal Reserve account debited.
_________________________
CRCM

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#1519538 - 03/09/11 02:15 PM Re: Reclamation of Social Security deposit [Re: madukes]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 30979
Loc: Cape Cod
Treasury's reclamation rules state that Treasury rules by themselves don't give you a right to pursue the daughter (in your case) for the funds. However, if you had language in your account agreement allowing you to recover funds removed under such circumstances, you'd have a claim against the daughter.

The key issue for your liability is when your bank learned of the death of your depositor.
_________________________
John S Burnett
BankersOnline.com

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#1519660 - 03/09/11 04:07 PM Re: Reclamation of Social Security deposit [Re: John Burnett]
OhMyStars Offline
Member

Registered: 11/08/10
Posts: 53
Loc: Midwest
So are you saying we can't debit the daughter's account, do a charge off and then send it for collection?
_________________________
CRCM

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#1519667 - 03/09/11 04:17 PM Re: Reclamation of Social Security deposit [Re: OhMyStars]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 30979
Loc: Cape Cod
I'm saying you need to review your legal contract with the depositor to see what your recourse might be.
_________________________
John S Burnett
BankersOnline.com

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#1519673 - 03/09/11 04:20 PM Re: Reclamation of Social Security deposit [Re: John Burnett]
OhMyStars Offline
Member

Registered: 11/08/10
Posts: 53
Loc: Midwest
I should have mentioned in my previous post that I did take a look at it and could not find anything where we could hold her accountable.
_________________________
CRCM

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#1519822 - 03/10/11 06:41 AM Re: Reclamation of Social Security deposit [Re: OhMyStars]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17577
Loc: Another trip around the sun
You gave provisional credit for the check when it was deposited. When you repay Treasury you will automatically debit the amount of the item back to the account, revoking that provisional credit. If it overdraws the account and your signature card has standard language making every signatory liable for the overdraft you have what you need.

All the Treasury regulations do is fix your liability for the payment. They do not tell you how to recoup your loss from someone else.
_________________________
"Oh God, thy sea is so great and my boat is so small." Breton fisherman's prayer in JFK's office.

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#1519851 - 03/10/11 08:40 AM Re: Reclamation of Social Security deposit [Re: Ken_Pegasus]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 30979
Loc: Cape Cod
The rub here is that, according to the scenario painted by OhMyStars, the daughter has closed the account. That may make charging back the dishonored item a problem.
_________________________
John S Burnett
BankersOnline.com

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#1519863 - 03/10/11 08:49 AM Re: Reclamation of Social Security deposit [Re: John Burnett]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17577
Loc: Another trip around the sun
Thanks, I did not notice that. Regardless, I would profess my belief in resurrection in this specific instance. I'd be happy to stand in front of a judge and say: The terms of the contract clearly applied at the time the item was deposited; she cannot limit her liability under the contract by closing the account at a later date.
_________________________
"Oh God, thy sea is so great and my boat is so small." Breton fisherman's prayer in JFK's office.

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#1627201 - 11/10/11 11:25 AM Re: Reclamation of Social Security deposit [Re: Ken_Pegasus]
brainOverload Offline
Gold Star

Registered: 07/02/08
Posts: 269
Loc: DFW, Texas
I would like to reopen this...same situation but slightly different:

*Mother died Oct 27
*SSA Dir Dep Nov 3
*Account closed by daughter Nov 3 (allowd because ACH DIR DEP is immediate availability)
*Death Notification received Nov 9

Now we did not know that mother died before the daughter closed the account and took the payment...what do we do when the reclamation comes to us?

Do we have a legitimate right to tell them the daughter took the funds because we were not notified in a timely manner and they will have to go after her.

-OR_

The daughter still has an account with us, do we have the right to take the money from her account now that we know?
_________________________
I've got a problem for your solution...

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#1627229 - 11/10/11 11:41 AM Re: Reclamation of Social Security deposit [Re: brainOverload]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 51225
Loc: Galveston, TX
Was the daughter on the account? How did she close it if she wasn't?

Then read this:

http://www.fms.treas.gov/greenbook/reclam/index.html
_________________________
The opinions expressed are my own, take them or leave them.

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#1627233 - 11/10/11 11:45 AM Re: Reclamation of Social Security deposit [Re: rlcarey]
brainOverload Offline
Gold Star

Registered: 07/02/08
Posts: 269
Loc: DFW, Texas
Actually daughter was "guardian" for mother and the account was receiveing those guardian payments.

Account was styled:
Mother
Daughter, Guardian
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I've got a problem for your solution...

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