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#2250553 - 03/15/21 03:48 PM Single-Party CD Owner dies
Lele Offline
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Lele
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A single-party CD owner dies and the bank received notification about 1 month later. Can the bank cease paying interest on a single party interest bearing account once the death notice is received?
TIA
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#2250554 - 03/15/21 03:54 PM Re: Single-Party CD Owner dies Lele
BrianC Offline
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BrianC
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Illinois
The funds now belong to the estate and the estate is just as entitled to earn interest as the deceased owner. Once the court appointed administrator comes forward, you should adjust the interest reporting to report interest paid prior to death for the decedent and interest paid after death to the estate.
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#2250558 - 03/15/21 04:06 PM Re: Single-Party CD Owner dies Lele
Lele Offline
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Lele
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Forgot to mentions: There is a POD on the account.
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#2250559 - 03/15/21 04:09 PM Re: Single-Party CD Owner dies Lele
rlcarey Offline
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Same premise applies.
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#2250567 - 03/15/21 05:32 PM Re: Single-Party CD Owner dies Lele
BrianC Offline
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Illinois
Yep. Substitute beneficiary for estate in my original response.
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#2250568 - 03/15/21 05:32 PM Re: Single-Party CD Owner dies Lele
Lele Offline
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Lele
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Thank you!
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#2250603 - 03/15/21 08:48 PM Re: Single-Party CD Owner dies Lele
Lele Offline
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Lele
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Clarification since I am asked, is paying the interest required? There appears to be a question on the word, "entitled"
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#2250604 - 03/15/21 08:56 PM Re: Single-Party CD Owner dies Lele
BrianC Offline
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BrianC
Joined: Nov 2004
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Illinois
The certificate is a contract. Any ability to suspend paying interest because the bank concludes the contract is void due to the death of the account owner is a matter of state law and I would direct this question to legal counsel.

From a reputation risk perspective, if counsel says it is permissible to hold the beneficiary's money interest free, consider their reaction when they find out as well as all their social media friends' reactions.
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#2250644 - 03/16/21 03:48 PM Re: Single-Party CD Owner dies Lele
P*Q Offline

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P*Q
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Somewhere
That's what has been going through my head too Brian. I was like why would you want to stop paying interest just because someone passed away, especially what little interest CD's typically earn anyway. Even if you could, why would you just based on the reputation risk alone.

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