Questions frequently arise regarding the manner in which a bank should respond when a person presents a claim for funds held in an account belonging to a deceased customer.
The documentation required to release funds under the circumstances will vary based upon: (1) how the decedent’s account is titled; and (2) the value of the decedent’s estate. For example, common account titles include accounts in an individual’s name (solely-owned accounts), accounts in joint names (joint accounts), and accounts with a payable on death beneficiary (POD accounts).
A. Joint/POD Accounts.
If the account is titled in the name of more than one person (a joint account) or has a payable on death (POD) beneficiary, the account does not constitute a “probate” asset. In that case, the bank may release the funds to the surviving joint owner(s) named on the account or to the designated beneficiary upon the presentment of the decedent’s death certificate.
B. Solely-Owned Accounts
If the account is titled in the name of the decedent only, with no POD beneficiary designated, (solely-owned account), then the account constitutes a “probate” asset. As a “probate” asset, the bank should require either:
A bank may rely on a small estate affidavit for personal property to release funds on deposit that constitute “probate assets.” Unless the bank has reason to believe the facts are otherwise than as stated in the affidavit, the affidavit offers protection to the bank for the distribution of funds. In order to be valid, a small estate affidavit must state, at a minimum:
(See NBA Compliance Handbook, Volume III, Miscellaneous tab, for more information regarding Small Estate Affidavits for Personal Property.)
Letters of Personal Representative are issued pursuant by an order by a court granting a decedent’s personal representative authority to administer a decedent’s financial affairs and distribute the decedent’s property to his or her heirs or beneficiaries. The bank should request a certified copy of the personal representative’s Letters and retain a copy of the Letters in the bank file in any case in which a small estate affidavit for personal property may not be used.