How do you handle a check made payable to a deceased customer? If there is no will, do you require a small estate affidavit?

State law will determine your answer. Not all states have a small estate affidavit statute. You should probably post your question in the applicable state forum.

Being that I'm from Illinois as well, I can offer an opinion. A check payable to a deceased customer legally belongs to the estate. In the event that the estate will not be probated, Illinois does have a small estate law. Note to whom it directs the small estate affidavit to be given.

(755 ILCS 5/25-1) (from Ch. 110 1/2, par. 25-1)

Sec. 25-1. Payment or delivery of small estate of decedent upon affidavit.

(a) When any person or corporation (1) indebted to or holding personal estate of a decedent, (2) controlling the right of access to decedent's safe deposit box or (3) acting as registrar or transfer agent of any evidence of interest, indebtedness, property or right is furnished with a small estate affidavit in substantially the form hereinafter set forth, that person or corporation shall pay the indebtedness, grant access to the safe deposit box, deliver the personal estate or transfer or issue the evidence of interest, indebtedness, property or right to persons and in the manner specified in paragraph 11 of the affidavit or to an agent appointed as hereinafter set forth. [text of small estate affidavit follows]

The bank is not the "person or corporation holding personal estate of a decedent" in this situation. The drawer of the check is. The proper way to handle these items is to direct the individual who has claim to the funds to send the affidavit to the drawer of the check and ask that the check be reissued.

If the bank chooses to allow the individual presenting the check deposit or cash it, understand that you are on notice of a potential breach of fiduciary duty and could be liable to any other individuals/entities who have claim to the funds. Depending on the relationship, you may or may not be able to collect from the original presenter.

It seems like we have been receiving more and more checks and ACHs made payable to estate of _____ and the surviving spouse is trying to deposit the check.

If we make the customer get a small estate affidavit and the spouse is appointed administrator, can they endorse the check and deposit it into their personal account or do they need to set up an estate account with a EIN?

Also, how do you an ACH made payable to the estate deposited in the surviving spouse account?

In my opinion, the amount of the check would play a part in the decision. If it is a $50 one time insurance premium reimbursement check, I'm not worried about our liability.