We have a customer who has passed away in the last few days. What are the guidelines on paying a check that was written by the customer before their death? The customer also had their loan payment set up to be automatically debited from their checking account. This is set to come out 2 days from now. Can we allow this debit from their account?

I would imagine if the check was legitimate and properly payable while the signer was still alive it would not cease to be when the signer "ceased to be".

We usually put a hold on the account such that we can review any debits before they are paid. We will look at the check to determine if the signature looks like the one we have on file and if the date was prior to the date of death of the customer. We usually go ahead and pay it within the first 10 days of the customer's death, unless we have reason to believe it should not be paid. After the ten days, all checks are returned.

There's this little provision of the UCC in your state. Take a look at Article 4, section 4-405 in your state's UCC, and you will probably see that once you know of your depositor's demise, you may (not must) pay checks for up to 10 days after the date of death. The assumption is that the checks have to have been issued before death, of course, so watch for any creative attorneys-in-fact who attempt to pull funds out "post mortem," after their authority has ceased to be effective. Their checks should be rejected "Account owner deceased" or "no authority to pay."

Suppose your customer died on Tuesday, March 1, and you learned of the death on Tuesday, March 8. You'd be able to honor checks through March 11 only (ten days after death).

And I think you'll also see in §4-405 the phrase "unless ordered to stop payment by a person claiming an interest in the account." So, if a creditor of the estate figures out you're holding the checking account at your bank and comes in on March 9 to tell you to stop paying checks, the creditor has an interest in the account, and you'd have to stop paying any more checks at once.

And, after the tenth calendar day following the date of death, no further checks would be properly payable from the account.

John, would you treat ACH debits the same way (honor them for 10 days after death), stop them immediately upon learning of death, or continue to pay? I don't think the UCC is specific on this point is it?

The UCC says nothing about ACH entries. Unfortunately, neither Regulation E nor the NACHA rules addresses what to do in the event of ACH debits to a decedent's account, either.

Common sense tells us that an authorization for an ACH entry ends with the death of the Receiver, and that makes good sense for things like a gym membership, life insurance premiums, etc. But what about debits for the electric bill or other key utilities?

If there is a surviving co-owner on the account, how do you know which co-owner (the decedent or the survivor) authorized the payments? If there is no surviving co-owner, will there be an estate administration? Will the estate want some of those debits to continue?

I think the best idea is to contact someone in the decedent's family, if you can, to sort things out. Give them a deadline for getting the old ACH authorizations canceled or replaced. After the deadline, go ahead and start sending debits back R15.