We have a customer who is opening an estate account. She is wanting to deposit a US Treasury Check into the estate account. However, the check is made out to the deceased and his wife. The customer said that their lawyer told them to put the check into the estate account. Due to liability issues, we refused to deposit the check. The customer came back with the check endorsed the following, Payable to the Estate of the Deceased, then signed by the surviving wife. We still refused to deposit the check. Have we done the right thing? Have any of you had a situation like this? If so, how did you handle it? Would a letter from the lawyer stating that the check is to go into the estate account be sufficient to take the liability off of the bank?

Thanks in advance for your assistance.

The pivotal issue in a personal representative's ability to negotiate a U.S. Treasury check payable to a decdent is what the check is for. The issue and a description of an appropriate indorsement is detailed here.

Since the check is joint with the decedent's spouse, I am assuming that it is a federal income tax refund. The code on the check could verify or disprove that. If it is a federal income tax refund, then the personal representative and the spouse could jointly indorse the check. Whether the entire amount of the check actually belongs to the estate is between the spouse and the personal representative.

Obviously, you would rather have had the spouse sign the check and provide identification in your presence. Under the circumstances, you might decide not to push the issue.

I always thought that you shouldn't deposit a check payable to joint payees into individual accounts because of the liability of the other owner claiming that they did not receive their half.

So, Ken are you saying that if the executor signs the check for the deceased (properly as you mentioned) and the living spouse signs the check, then the executor can deposit into the estate account without liability to the bank?

You afraid of the dead guy???

FWIW in this not so unique situation, I think you are overthinking the situation. As stated above, this is most likely a tax return check, and since you appear to have the wife's OK with her endorsement and that it seems she may have given the check to the PR in the first place, I would just deposit the check as requested.

I would be just as comfortable in this situation to deposit the check into the wife's single/joint account as well.

No, I am not afraid of the dead guy, bbsgrant. Like I said, I have always been told that if you deposit a joint payee check into an individual account, the second payee could come back to the bank and claim that they did not get their half. Like you said, maybe I am overthinking the situation, but I just want to make sure the bank isn't going to be liable if the spouse comes back and wants her half.

Maybe I've been listening to the wrong people, but you would think that people with two to four times more banking experience than you would know what they are talking about. So much for thinking.

This makes me think of another question...

What if the refund was deposited electronically? Would the Bank's system be able to detect a joint refund being direct deposited into an individual account?

No, over the years we just tend to train and pass down bad information and habits until everyone thinks they are facts and procedures.

Your concern is valid about joint payees regarding their beneficial interest in checks, especially government issued checks. My guess here is that the wife will be the sole, if not main beneficiary when this is all said and done, so the attorney felt it was just easier to deposit the check into the estate account, vs. trying to have the check reissued and such.

Since you have the wife's endorsement on the check, that says she is aware of what is going on, supposedly, I would not not worry about it.

Now if this was issued to them and they were divorced or int he process of...heheheee....yeah, then pull out all the stops!!

The IRS has no problem direct depositing a joint refund into an individual account or vice versa. They do, however, warn taxpayers that the receiving banks may not be so liberal, so that mis-matched direct deposits MAY (if the banks take the time or have the ability) be refused. In that case, says the IRS, they will simply re-issue the refund on a paper check.