Answer by Mary Beth Guard:
If your customer has died and no probate is going to be filed, check your statutes to see if you have a small estate heirship provision. In our state, if the individual dies without a will and has $5,000 or less in a sole ownership account, the financial institution can release the funds to the heirs upon receipt of an heirship affidavit.
In the absence of that, you are taking a business risk if you release the funds to anyone. Without the oversight of a court, you are engaging in risky business when you decide to accept someone's word that this is really the Will of the decedent and that they would be the executor of the estate. You have no way of knowing whether this is indeed the last will, or whether 20 others were executed in the interim between that document and the individual's death. Even if the person would have been the executor and it really is the last will, they haven't posted a bond and aren't under the supervision of a court. You have no way of knowing whether they will do what they should with the funds.
Having said all that, if the amount in question is very small, you may want to go ahead and release the funds to a party who makes what appears to be a good argument for them. If possible, however, get that person to sign an indemnification agreement.
Answer by Barbara Hurst:
Mary Beth is right - you should check with your state statutes. In Pennsylvania the amount is $3500 (we have less expensive burials than in Oklahoma!). Where there is no estate being administered, if there is less than $3500 in the account(s) of a single name person a financial institution, upon presentation of a death certificate, a funeral bill, and a letter or form of indemnification, can close the accounts and make the bank check payable to the funeral home AND the person who is responsible for the funeral bill. That person is usually the one who also signs the indemnification. The check must be endorsed by both, thereby ensuring that the funeral home gets paid.
First published on BankersOnline.com 04/14/03