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#1423004 - 08/02/10 09:07 PM Revocable Trust and Funeral Expenses
xerx Offline
100 Club
xerx
Joined: Jul 2010
Posts: 226
A man dies. He has roughly $25k in his bank account, which is setup as a revocable trust. The beneficiary on the account is a female friend (not family). The decedent has heirs, including a son.

The funeral director comes to the bank and wants to know if the bank will authorize payment for the funeral services.

(1) What is the bank’s least risky move?
(2) Does the bank have any authority to approve payment of the decedent’s funeral without getting the beneficiaries request?

I assume this is state law. Any thoughts are appreciated. I have an opinion, and the decision's already been made. I'm just trying to educate myself for the next one.

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#1425976 - 08/09/10 04:28 PM Re: Revocable Trust and Funeral Expenses xerx
xerx Offline
100 Club
xerx
Joined: Jul 2010
Posts: 226
Alas, I think I will try to answer my own question again.

(1) Keep the money unless the funeral creditor opens a probate proceeding.
(2) Technically, the funeral creditor must follow some procedure like opening a probate proceeding to obtain a legal claim to the money in the payable on death account. That said, the funeral creditor likely has a legitimate claim.

See this:

The most famous Illinois case involving payable on death accounts and creditors is Montgomery v. Michaels, a 1973 Illinois Supreme Court decision.65 The Montgomery case involved a woman named Bernice D. Montgomery who, during her lifetime, established eight payable on death accounts, with her two children from a prior marriage as beneficiaries. Upon Mrs. Montgomery’s death, her husband and administrator (Dr. Earl Montgomery) sought to have the accounts declared illusory and invalid as a fraud on his marital rights. The Supreme Court wound up agreeing with Dr. Montgomery, but for purposes of this article the Court’s more interesting ruling involved the question of whether the payable on death account funds had to be used to pay for Mrs. Montgomery’s funeral. The trial court had ruled that Mrs. Montgomery’s funeral bill must be satisfied from the payable on death accounts, and the Illinois Supreme Court agreed:

In the event funds from other property are insufficient to pay debts and claims against the decedent’s estate, then such trust funds are available for the payment of estate debts and can also be reached for the payment of the expenses of administering the estate if there is not sufficient other property for this purpose.66

http://www.deathandtaxesblog.com/Claims%20Against%20a%20Decedent's%20Non-Probate%20Property%20in%20Illinois.pdf

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#1426016 - 08/09/10 05:03 PM Re: Revocable Trust and Funeral Expenses xerx
MyBrainHurts Offline
Platinum Poster
Joined: Feb 2010
Posts: 960
Illinois
I hope you'll have more conversations with yourself, because I just learned something from that one.
_________________________
I thought getting old would take longer.

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