If the payee of a check dies before they negotiate it, can it be deposited into their account?
What about a U.S. Treasury Check? If they are truly due the check (such as social security for previous month) can those be deposited since the payee hasn't endorsed and is deceased, or must they be re-issued by the SSA?

Any funds formerly belonging to the decedent now belong to their estate. The check should not be deposited into the decedent's old account as the bank could be liable for conversion to any heirs who have claim to those funds.

If the account in question was owned solely by the deceased, a check payable to the deceased can generally be deposited into it. HOWEVER, different rules apply to checks issued by insurance companies (which usually include a warning above the endorsement line that the payee must be alive), and to Treasury checks.

Treasury check negotiation is covered by the Treasury Department Fiscal Service's regulations at 31 CFR Part 240, "INDORSEMENT AND PAYMENT OF CHECKS DRAWN ON THE UNITED STATES TREASURY." In particular, look at §240.15.

Summarizing and quoting, if a personal representative (PR) has been appointed for the estate of the decedent payee, the PR can endorse and deposit U.S. Treasury checks "for payments the right to which under law does not terminate with the death of the payee: payments for the redemption of currencies or for principal and/or interest on U.S. securities; payments for tax refunds; and payments for goods and services." The bank is responsible for obtaining and retaining a copy of documentation of the appointment.

Other types of Treasury checks, such as SSA or SSI payments or other payments the right to which ceases with death, cannot be lawfully negotiated by the PR. Instead, those checks should be returned to the authorizing agency for determination as two whether the check may be reissued, and to whom. In your example, the check for an SSA payment for the month prior to death would undoubtedly be reissued, but probably to the "estate of John Jones."

In case you wonder, if you have notice of death and then receive a direct deposit of an SSA payment for the previous month, you should return it and the SSA will handle reissuance.

To continue on, if the account was jointly owned (with right of survivorship) by John Jones and Sara Jones, a check payable to John Jones should not be deposited to the account after his death (because it isn't owned by the estate; it's owned by Sara). And if the account was solely owned by John Jones but designated as POD to Ben Jones, the check payable to John Jones should not be accepted for deposit, because the account doesn't belong to the estate, but to Ben. And the joint account and POD account statements apply whether or not the survivor or beneficiary has taken steps to claim the account. Even if it still sits on your records as a joint account or POD account styled as it was before John Jones' death, ownership has changed as a matter of law.

Thanks. That's what I thought on the US Treasury checks but wanted to clarify due to something I had read.

I'm not sure that I remembered some types of checks could be deposited into a sole owner account of the deceased. I thought the account had to be either be changed to an estate account or an estate account opened and then a personal representative had to negotiate the item.

Garden variety checks can be deposited into a decedent's account if you allow it. I would not.

The personal representative of the decedent's estate should make the decision about whether acceptance of the check in payment is appropriate, not your teller.

Thanks

What would you do about a wire that comes into the account after the sole owner dies? Source of wire was decedent's trust. Theoretically, we think the trust company probably started to send the $ before the owner died, but it didn't reach us until 3 days after date of death.

To further complicate, the account had PODs who we suspect aren't the same heirs listed in the estate. So, wondering what bank's role is in determining what should be done with those funds. We've frozen the money temporarily until determination can be made. No PR has come forward yet.

Appreciate your guidance John.

Hello - I need to bump this question. Decedent had joint account with son, who was also her POA. Don't know if he is only living heir.

Decedent received $28K check before death, which was never deposited. Can it be deposited now into the joint account or no? Our state's UCC allows for the negotiation of checks DRAWN on an account for 10 days after death, but so far I've found nothing mentioning the depositing of checks into an account after a person dies. Can anyone clarify? Thanks.

No. The check's proceeds belong to the payee's estate, and the joint account is now owned by her son, not by the estate. It would be like deposited a check payable to you into my account -- clearly that wouldn't work for you.

Son may at some point end up with the funds from the check IF he is the only heir, and there are no other estate obligations, but the check has to be deposited to an account of the estate.

And FWIW, the fact that he was attorney-in-fact for his mother is a red herring. His authority under the POA ended with his mother's death.

This check should be deposited into the estate of the decedent. If you allow it to be deposited to the joint account, and the joint owner takes the money, the bank would be liable for any person, creditor, etc. that has a claim to the estate.

Thanks, guys. I knew the POA ceased on death - should've left that fact out...

Appreciate the fast replies.

A member brought in a US Treasury Check made payable to her, and on line 2 states O/A/O Jane Doe. O/A/O means "on account o"f but when we questioned member, she said Ms. Doe passed away in 2009 and this is check representing the division of the estate. The memo line on the Treasury check states "Soc Sec for Ins." Do we need our member to open an estate account and to get PR paperwork to negotiate the check? Jane Doe never had an account here, so we have no background.

No. The reference to Jane Doe's estate on the check is simply a reference to the reason the check was issued -- Treasury's equivalent for a "memo line" entry, if you will. The check is payable to your member, and you should have no problem accepting it for deposit to her account with your credit union. Neither Jane Doe nor her estate is a payee of the check.

Thank you John!