Answer:
Answer by Ken Golliher: After the first 6 days of the term, banks may waive time deposit early withdrawal penalties under any circumstance they deem appropriate. This would be the most compelling circumstance I could think of because it may help the bank comply with its own responsibilities in connection with reporting interest on the correct SSN.
It is commonplace that banks allow a time deposit to be retitled, not just remove the name of a decedent, after a death has occurred. They generally do not treat these transactions as a withdrawal. In this instance, the original account should be closed and a new one opened even when it is for the original interest rate and the remaining term. Changing ownership via file maintenance to the original account is sloppy and may generate problems.
Answer:
Answer by John Burnett: Although it's extremely unlikely to need to address matters within the first 6 days of the CD term, the death of an owner of the account is one of the legitimate events that allow an exception to even the regulatory early withdrawal penalty requirement.
First published on BankersOnline.com 2/11/13
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