Deposit Account - Setoff

Posted By: TeamComply

Deposit Account - Setoff - 03/07/18 08:54 PM

Customer maintains a joint checking and savings account with her adult daughter (joint ownership on both accounts). Daughter also maintains her own checking account with bank (individual ownership). Customer recently passed away, joint checking is overdrawn. Do we have the right of setoff on the adult child's individual account to cover the overdraft in the joint checking account? Is setoff strictly a state law matter or where can I find information on this topic? Thanks.
Posted By: rlcarey

Re: Deposit Account - Setoff - 03/07/18 10:16 PM

Setoff is a matter of State law, but the joint checking accounts are no longer joint if one party is dead. The daughter owns them all.
Posted By: TeamComply

Re: Deposit Account - Setoff - 03/07/18 10:36 PM

Thank you for the response.

I have another setoff related scenario/question. Are there any special rules with regard to setoff when there are federal benefit payment on the account? This is a separate account from the one discussed prior.

Second situation: Again, joint account - and one owner recent died, a stop payment was issued for the Feb. Federal Benefit Payment. The ID number for the benefit payment changed and therefore at the beginning of March the Federal Benefit Payment posted to the account again (for the decedent). Joint owner (an adult child) withdrawals the FBP from the account; bank is required to return the FBP since recipient is deceased; joint account is now OD several hundred dollars. Adult child has been contacted and is not willing to return the money withdrawn, adult child also has an individual account with bank. Can we execute the right of setoff in this situation against the adult child's individual account? Wasn't sure if different rules apply when FBPs are involved. Thanks.
Posted By: rlcarey

Re: Deposit Account - Setoff - 03/07/18 10:57 PM

Again - State law issue, but it doesn't appear that you would be offsetting a Federal benefits payment - you are trying to recapture one from the perpetrator of this fraud.
Posted By: TeamComply

Re: Deposit Account - Setoff - 03/07/18 11:00 PM

Thank you, appreciate your thoughts on this.