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Posted by ps56k on August 30, 2008, 5:52 am
we were chatting with some extended family members,
and was wondering about some death issues...
So - what happens when a person dies with respect to their accounts.
Not related to taxes... but you can comment... more of avail & access.
How do the financial institutions learn (if at all) that a person has died.
Is it related to the Death Certificate - does it have a SSN
that winds up getting shared with the financial world ?
It appears that "bank" accounts, like checking or savings,
might have a primary holder (I'm guessing the reporting SSN)
along with any "signature" holders.... or are they joint ?
So, when a person dies, the other sig holders may still write checks on the
account,
but does it ever get "frozen".
Mutual Fund accounts with joint tenancy should just continue since it is
"joint".
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Posted by Avrum Lapin on August 30, 2008, 10:15 am
> we were chatting with some extended family members,
> and was wondering about some death issues...
>
> So - what happens when a person dies with respect to their accounts.
> Not related to taxes... but you can comment... more of avail & access.
>
> How do the financial institutions learn (if at all) that a person has died.
> Is it related to the Death Certificate - does it have a SSN
> that winds up getting shared with the financial world ?
>
> It appears that "bank" accounts, like checking or savings,
> might have a primary holder (I'm guessing the reporting SSN)
> along with any "signature" holders.... or are they joint ?
>
> So, when a person dies, the other sig holders may still write checks on the
> account,
> but does it ever get "frozen".
>
> Mutual Fund accounts with joint tenancy should just continue since it is
> "joint".
The bank needs the death certificate. They don't peruse the obits
If the account is a transfer on death, pay on death or joint account
then the surviving person presents the death certificate and the
transfer occurs - it could be as soon as instantly or maybe in weeks
time.
If the account is governed by a will or trust the executor/trustee needs
to present the death certificate and the will or trust and or other
documents that establishes they they are they are the will or trustee.
After death the other signatories can continue writing checks.
After the bank finds out about the death direct deposits will be blocked
and ones made out to the decedent will be returned to the sender
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Posted by Mark Freeland on August 30, 2008, 4:44 pm
> The bank needs the death certificate. They don't peruse the obits
>
> If the account is a transfer on death, pay on death or joint account
> then the surviving person presents the death certificate and the
> transfer occurs - it could be as soon as instantly or maybe in weeks
> time.
Several states also require a state inheritance tax waiver.
Description:
https://www.invescoaim.com/portal/site/aim/template.DETAIL?contentGuid=ac5bbb4011db2010VgnVCM10000026b4bf0aRCRD#h11
State rules:
http://www.usbank.com/cgi_w/cfm/commercial_business/products_and_services/corp_trust/inherit_tax_ps.cfm#state_req_top
> If the account is governed by a will or trust the executor/trustee needs
> to present the death certificate and the will or trust and or other
> documents that establishes they they are they are the will or trustee.
A will shouldn't be required, because it is none of the financial
institution's concern how the estate's assets are distributed. Rather, the
financial institution cares only who the executor/administrator is, and will
require a statement from the state verifying this person's status as
executor/administrator. (This in turn means that the will has been probated
to establish the executor.) In effect, the executor/administrator stands in
for the deceased.
If by trust you are thinking about something like an IRA (where the
financial institution is a trustee or custodian), then the financial
institution is acting as trustee in accordance with the terms of the trust.
Specifically, the trust distributes the assets to the beneficiaries (or
estate if no beneficiaries named). The beneficiaries need to present a
death certificate and possibly inheritance tax waiver. That's it. If the
estate is the beneficiary, then the executor/administrator needs
certification from the state, as with a will.
But if the financial institution is not the trustee for the trust, the fact
that the trust is supposed to pay out because of a death is of no concern to
the financial institution. The institution simply deals with the trustee.
So long as the trustee is not the deceased, I don't believe any
documentation is required by the financial institution - nothing has changed
in the relationship between trustee and financial institution. On the other
hand, if it is the trustee who has died, then it's a little hard for the
trustee to provide documents :-).
Here's TRP's brokerage transfer form, with very clear directions on all
these situations (owner died, trustee died, JTWROS, TOD). I found TRP to be
the most helpful of any institution I dealt with under these circumstances.
http://www.troweprice.com/gcFiles/pdf/BrokChngOwnr07192005.pdf
Mark Freeland
nNeEwTs@nyc.rr.com
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Posted by Avrum Lapin on August 30, 2008, 8:55 pm
big snip
>
> If by trust you are thinking about something like an IRA (where the
> financial institution is a trustee or custodian), then the financial
> institution is acting as trustee in accordance with the terms of the trust.
> Specifically, the trust distributes the assets to the beneficiaries (or
> estate if no beneficiaries named). The beneficiaries need to present a
> death certificate and possibly inheritance tax waiver. That's it. If the
> estate is the beneficiary, then the executor/administrator needs
> certification from the state, as with a will.
>
> But if the financial institution is not the trustee for the trust, the fact
> that the trust is supposed to pay out because of a death is of no concern to
> the financial institution. The institution simply deals with the trustee.
> So long as the trustee is not the deceased, I don't believe any
> documentation is required by the financial institution - nothing has changed
> in the relationship between trustee and financial institution. On the other
> hand, if it is the trustee who has died, then it's a little hard for the
> trustee to provide documents :-).
>
>From personal experience, when my first wife died, the three
institutions where she held accounts naming a trust as a beneficiary
all wanted to see the death certificate (none kept it,) and the trust to
see that I was indeed the trustee. The nosiest was the bank who sent a
copy of the trust to their head office, the least nosiest was Smith
Barney whose local office had kept a copy of the trust when the account
was opened.
After I remarried and my new wife retitled her house from her trust to
hers and my house the local tax assessor wanted to see my trust and the
marriage certificate to preserve the proposition 13 assessment
(transfers to spouses do not generate a re-assessment.)
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Posted by Mark Freeland on August 31, 2008, 9:15 am
>
> big snip
>> But if the financial institution is not the trustee for the trust, the
>> fact
>> that the trust is supposed to pay out because of a death is of no concern
>> to
>> the financial institution. The institution simply deals with the
>> trustee.
(I was referring to a trust being the owner, not the beneficiary - focusing
on the owner's death.)
[more cut]
>>From personal experience, when my first wife died, the three
> institutions where she held accounts naming a trust as a beneficiary
> all wanted to see the death certificate (none kept it,) and the trust to
> see that I was indeed the trustee.
That's a different situation than the one I was describing - I misunderstood
the situation you were thinking of. Any beneficiary is going to have to
provide adequate proof of identity. As you said, for an estate or trust,
the executor/trustee is going to have to provide proof that they are indeed
the executor or trustee. For an executor, that's a declaration by the state
and not the will itself; for a trust that is the trust itself. The
difference between the two is that the will is probated, and that means the
state and not the will determines who the true executor is, while the trust
may not require state validation.
Mark Freeland
nNeEwTs@nyc.rr.com
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