What is your bank's practice when dealing with the death of the primary account holder on an interest bearing DDA account? Example, John Doe (primary) and Mary Doe (co-owner) are listed on the signature card (w/ ROS), and all the interest is reported under John's SS#. If John dies, what do you do with the account? Close and reopen a new account under Mary's name/TIN? Remove John's name and report the interest under Mary's name for the entire year?

I ask because we are being told that we have to close the account since some of the interest was earned under John's name and there is not a way to create a 1099-I for two different people on the same account.

We would change the account to Mary's name/SSN. Since she was a joint owner, she earned the interest the same as John did--the account was simply set up with John as primary, but it could just as easily been the other way around. The account earned the same interest, regardless of which owner was listed as primary. But, if Mary had been added to the account later than the beginning of the year, I could see where you might have a need for different 1099s.

Did the owners file a joint tax return? If so, it would not matter under whose TIN it was/is reported.

Great - thanks for your replies.