We have a deceased customer that had credit life on his loan. The loan was paid off and there was a double indemnity, so we have over $17,0000 in checks made payable to the estate. We have received an affidavit of heirship from the attorney requesting that we issue a cashiers check made payable to the heirs. Can we accept the heirs affidavit, take checks that are made payable to the estate and purchase cashiers checks made payable to the heirs? I keep thinking about the statute that only allows this to happen if their is not a will and the balance is under $5,000. Does this statute even apply to this situation, since the funds weren't on deposit with us and it is an insurance policy?

Normally, checks payable to an estate need to be turned over the the executor with that entity maintaining an account under the name of the estate. If you are questioning the attorney's (executor's?) authority to issue instructions, you need to secure additional authorization from the executor, but if you are satisfied with the attorney's instructions to convert the checks, that is the logical thing to do.

It is a little strange that you would have to be the entity to convert the checks - the executor should handle that task and all you should do is verify executor status and turn the checks over to that entity. It seems to me that the attorney is assigning risk to you and that is never a good situation. If I were you, I'd arrange to forward the checks to the executor and stay out of the check conversion business.

That is the problem, there is no executor to handle the estate. So, there isn't an account to deposit the funds into. All I have from the attorney is an Heirs Affidavit. There wasn't a will, and according to the attorney no reason to go through probate. My initial thought was that we must require legal documents from the court assigning an executor. Then, I began thinking about the Heirs Affidavit.

Under those conditions, I would not convert the checks.

You had better contact the bank's attorney for input on this as what would you do if another relative come forward after you convert the checks. Also, your state will have rules covering this situation.

From a personal experience, state of TX...A relative passed away without a will, all that was required was the affidavit of heirship executed/acknowledged by individuals who have known the deceased and can "testify" to number and status of heirs (marriages and surviving children from those marriages). In Tx, the surviving spouse and children, including children from a previous marriage become 50/50 heirs when a will is not executed. That would mean 50% to the spouse and 50% divided among the children. Did the attorney provide any disursement instructions such as this? Could you not reissue the remaining funds to the estate, in the manner that you received it from the insurance company and forward it to the attorney for disbursement? In TX, No probate would be necessary and no executor would have to be appointed..so I wouldn't depend on that happening...let the attorney handle it

Great insight and "let the attorney handle it" is the best part as the responsibility should not be assigned to taken over by the bank.

You don't indicate what state you are from, but you are clearly aware there is a state statute that applies. Whatever it says, don't go beyond its strict terms. Formal estate administration is intended to protect people, both heirs and creditors. If there is an exception to a requirement for a formal probate process, it is always narrowly construed.

If the checks are payable to the estate, you have neither the obligation, nor the right to convert them to a cashiers check payable to someone else, regardless of what the attorney says.

Golliher's rule:
Never take advice from the other guy's lawyer.
Whenever you believe legal advice is necessary, ask your own attorney.

My suggestion would be that you deliver the checks jointly to one of the heirs and the attorney who claims to represent them. Get a receipt.

If they negotiate it, the endorsement would be the responsibility of the institution that accepts it for deposit. Hopefully they will require the appropriate appointment of a personal representative.

However, if the attorney is so sure of his legal position, he can just go back to the insurance company and have the check reissued, right?