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#1650356 - 01/12/12 03:01 PM Depositing check into deceased customer's account
Anonymous
Unregistered


Quick explanation:

We have a customer who has died this morning. Customer's daughter informed us over the phone about this, and indicated that she has a check made payable to her mother (now deceased) that she wants to deposit into her mother's account. She of course doesn't have a death certificate or anything like that yet.

My question is: can we deposit that check without having to fear any legal complications, given that we're aware the customer is no longer alive?

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#1650372 - 01/12/12 03:06 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Doug Hendrickson Online
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Registered: 10/01/09
Posts: 3564
Loc: NE New Mexico
I would not allow the deposit now that you are aware of the facts. Once someone has been named as the personal representative then that person can deposit the check with the proper endorsement.
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I hear and I forget. I see and I remember. I do and I understand.--Confucius

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#1651549 - 01/17/12 11:32 AM Re: Depositing check into deceased customer's account [Re: Anonymous]
John Burnett Offline


10K Club

Registered: 10/27/00
Posts: 31984
Loc: Cape Cod
If the check is payable to the decedent and the account was only in the decedent's name, the bank can accept it for deposit unless it's a Social Security or similar recurring check payment from the Treasury or a check from an insurance company dated on or after the date of death. But no one can write checks or otherwise remove funds from the account other than the personal representative of the estate (unless the account is closed out by next of kin under state laws addressing small balance accounts.
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John S Burnett
BankersOnline.com

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#1651755 - 01/17/12 02:32 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Compli(cated) Offline
100 Club

Registered: 03/21/11
Posts: 131
Loc: Wisconsin
John, under what authority would the daughter be indorsing the check?
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#1651761 - 01/17/12 02:40 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
BrendaC Offline
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Registered: 09/18/01
Posts: 6029
Loc: Sweet Home AL
I would stamp or endorse as..."For deposit only into the account of the within payee."

If the item isn't one of those mentioned by John, there is no conversion of assets so there shouldn't be a problem. Would I do it for a $50,000 check? No. Would I do it for a $50 check within only a few days of death (and obviously written to individual prior to his/her death). Probably.
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#1652770 - 01/19/12 10:46 AM Re: Depositing check into deceased customer's account [Re: Anonymous]
John Burnett Offline


10K Club

Registered: 10/27/00
Posts: 31984
Loc: Cape Cod
Thanks, Brenda. I'd not want the daughter to indorse the check at all. I'd fall back on UCC 4-205, which addresses deposited unindorsed checks.
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John S Burnett
BankersOnline.com

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#1655739 - 01/25/12 12:23 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Compli(cated) Offline
100 Club

Registered: 03/21/11
Posts: 131
Loc: Wisconsin
John, isn't UCC 4-205 limited to customers depositing/cashing checks? The daughter is not a customer in this case, nor does she have authority to act on behalf of the customer.

4-205. DEPOSITARY BANK HOLDER OF UNINDORSED ITEM.
If a customer delivers an item to a depositary bank for collection:

(1) the depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of Section 3-302, it is a holder in due course; and
(2) the depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer's account.
_________________________
Opinions are my own.
"I was gratified to be able to answer promptly. I said I don't know." - Mark Twain

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#1656203 - 01/26/12 08:55 AM Re: Depositing check into deceased customer's account [Re: Anonymous]
John Burnett Offline


10K Club

Registered: 10/27/00
Posts: 31984
Loc: Cape Cod
You are definitely no dodo, doedoe. UCC 4-205 would probably not be the best on which to rely.

There will be checks payable to the decedent that could be a problem if deposited after the date of death. Examples are annuity payments and certain Treasury payments. There will also be checks that a bank could safely accept for deposit to the decedent's (formerly individually-held) account since they represent funds due the estate.

As a practical matter, endorsements are concerns when there are problems or claims after the fact. When there aren't any other claims to the funds, whether or not there's an endorsement isn't usually a concern. I don't say this to advocate chaos; I'm just pointing out that there are "gray areas" where things just get done in the name of expediency. There's no rule saying it's OK to do it that way, but it often falls into the "no harm, no foul" zone.
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John S Burnett
BankersOnline.com

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#2003774 - 03/24/15 05:20 PM Re: Depositing check into deceased customer's account [Re: John Burnett]
Anonymous
Unregistered


We have a new twist on this subject.

One of our customers issues annuities. They recently found out that one of their annuity customers passed away in 2013. The annutity named no beneficiaries and so should have ceased on the owners death. Since his passing the company has sent three annuity payments that appear to have been deposited by the son of the decedent.

What can we do to retrieve a refund from the son or the bank who has been depositing funds made payable to the deceased.

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#2003786 - 03/24/15 05:45 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 52969
Loc: Galveston, TX
Well, the endorsement has either been forged or the named payee has not received the funds, which represents a breach of the presentment warranty by the BOFD. State law will dictate how long you can go back to make a claim against the BOFD.
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#2003942 - 03/25/15 12:04 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Anonymous
Unregistered


Thanks Randy!

Our state is three years.

In this case we will send a letter to the BOFD explaining the situation and requesting a refund.

Are we at all obligated to refund our customer if we don't receive a refund from the BOFD?

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#2006653 - 04/07/15 04:02 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Comped Online
Member

Registered: 08/22/12
Posts: 56
The BOFD is requesting a hold harmless indemnification. This doesn't seem appropriate in this case. Any thoughts?

If the BOFD isn't willing to refund us without sending the indemnificaiton are we obligated to refund our customer?

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#2006848 - 04/08/15 02:10 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
RockChucker Online
Gold Star

Registered: 07/03/13
Posts: 325
Loc: The Country
When we receive these requests we often request a hold harmless just to CYA. But that is normally when we discover the issue and report it.
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#2006872 - 04/08/15 03:23 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
JacFSB Online


Power Poster

Registered: 11/19/01
Posts: 6231
Loc: PA
If you're asserting that the BOFD breached their warranty, then a hold harmless agreement is not appropriate to include with your claim.

That said, did you send anything else to the BOFD, such as forged endorsement affidavits, or which you are basing your warranty claim? Depending on how your claim is presented, it is entirely possible that the BOFD is requesting a hold harmless simply because they are not recognizing this as a breach of warranty claim.

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#2007045 - 04/09/15 10:41 AM Re: Depositing check into deceased customer's account [Re: Anonymous]
Comped Online
Member

Registered: 08/22/12
Posts: 56
We did not send a forged endorsement affidavit. We don't have much experience in making a forged endorsement claim and don't have a process. Is anyone willing to share a procedure and/or forms that they may have?

Some specific questions that we have are;

1. If the BOFD doesn't provide the refund are we required to make our customer whole?
2. Should our customer be contacting the BOFD directly or does this need to come from us?
3. Should our cusotmer be contacting the family of the deceased or should these all be handled through the BOFD.

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#2007047 - 04/09/15 10:56 AM Re: Depositing check into deceased customer's account [Re: Anonymous]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 52969
Loc: Galveston, TX
One more,

Should the Bank sit down with their legal counsel and work out the basis for internal procedures for handling such claims in your jurisdiction?
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The opinions expressed are my own, take them or leave them.

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#2007106 - 04/09/15 12:17 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Comped Online
Member

Registered: 08/22/12
Posts: 56
And one more,

Can this be run through the Fed as an adjustment?

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#2007123 - 04/09/15 12:55 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
JacFSB Online


Power Poster

Registered: 11/19/01
Posts: 6231
Loc: PA
A warranty breach would be handled directly between the banks, not run through Fed.

Randy's suggestion to get bank counsel involved is good advice, especially if you don't already have affidavit templates that have been reviewed by counsel.

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#2011414 - 04/30/15 04:08 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Anonymous
Unregistered


At our bank, a customer is "deceased" when we receive WRITTEN notification ADDRESSED to the bank or ACH notification from the Social Security Administration. Until we have received either of these, it's business as usual. In other words, we would accept the check for deposit.

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#2011430 - 04/30/15 04:23 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
Ken_Pegasus Offline

10K Club

Registered: 08/30/01
Posts: 18183
Loc: Another trip around the sun
That's foolish...
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#2011441 - 04/30/15 04:45 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
NSFW Online
Member

Registered: 04/19/13
Posts: 65
Loc: VA
Does this mean that if the customer had a power of attorney and you knew the customer was decreased, but had not "received WRITTEN notification ADDRESSED to the bank or ACH notification from the Social Security Administration" that you would allow that power of attorney to drain money from the account?

Seems to me the bank would be putting themselves in a very bad position.
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It is better to act cautiously beforehand than to suffer afterward.

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#2011799 - 05/04/15 10:17 AM Re: Depositing check into deceased customer's account [Re: Anonymous]
John Burnett Offline


10K Club

Registered: 10/27/00
Posts: 31984
Loc: Cape Cod
A bank gets "knowledge" from lots of different sources. Drawing too tight a definition on what constitutes "notice" can get a bank into trouble if it pays checks from an account or accepts Treasury direct deposits of recurring benefit payments (for example). If the bank learns of a customer's death from what might be "unofficial" sources, it should have a process for verifying that information; it can't simply ignore it.
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John S Burnett
BankersOnline.com

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#2011866 - 05/04/15 01:11 PM Re: Depositing check into deceased customer's account [Re: Anonymous]
JacFSB Online


Power Poster

Registered: 11/19/01
Posts: 6231
Loc: PA
To echo John's point:

While you certainly wouldn't want to pay out funds or otherwise take an action that can't be undone without official notice (ie: death certificate) of a customer's death, it is appropriate to respond to less formal notice by taking steps to protect the deceased depositor's funds.

See this discussion for more.

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