RMD Check Cashing Post Death

[PERSonalTime]

Dad received an RMD check in January and signed the check. But then passed away at the end of the month without depositing the check. Is it OK if the daughter takes the check to be deposited in February?

 

[N02L84ER]

I believe it is OK. We deposited checks for my MIL after she passed and the bank said it didn't even matter if the back of the check was unsigned as long as it is a deposit. Of course, the bank may not have cared but I could see the check originator might require a signature. DH signed the checks with his name plus the word Executor just to be on the safe side. The custodian knows your Dad was the recipient and the 1099 will be made out with his name.

 

[H2ODude]

Kind of hazy as it was 7 years ago DW's mother passed. We had cared for her for 8-9 years, when she passed she was receiving SS and had a checking account DW was a signatory to. Don't recall how the credit union found out (we likely told them) that she'd passed, but that was unfortunate. We didn't do any probate, there being only about $10k in her account we split with DW's brother. All well and good.

About a month after death she got a check for about $600 from some insurance, made out to her. It took a lot of pleading with the CU manager but he allowed us to deposit it in the account so DW could access it. The issue is that if any creditors have any claims against the deceased, this "hides" it from them since there is no estate settlement vehicle (or whatever it would be called). Then another check came in and we REALLY had to plead with the manager to do it again, but he did make us get a letter from the brother agreeing it was OK. Other interesting thing I recall is I called her credit card company, intending to pay the final bill of something like $1,000. We'd taken care of it by internet in past. As soon as they heard she died, everything just closed up. No final bill, couldn't access account on net. So the $1,000 bill just went kaput.

 

[disneysteve]

Do you want the legal answer or the practical answer?


Legally, when someone dies, all of their accounts should be locked and frozen. Nobody should have access. You shouldn't be allowed to conduct any business, in or out of that account. Any monetary transactions after death should go into an estate account until the estate is settled.


Realistically, many people don't notify the banks immediately upon someone's death. Either they just don't think about it or they do it intentionally for reasons such as this. The problem with doing so is that if there are multiple beneficiaries and one of them finds out that someone has been getting into the account, that could raise concerns about how the estate is being handled.


Any accounts without a designated beneficiary (like life insurance or a retirement account) or joint with right of survivorship or payable on death titling need to go through probate (unless held in a trust which changes the rules).


I'm in the final stages of settling my late cousin's estate. Every check that came in after he died got sent to the estate account. I won't see a penny of that money until the estate is formally closed and he died last May.

 

[disneysteve]

Kind of hazy as it was 7 years ago DW's mother passed. We had cared for her for 8-9 years, when she passed she was receiving SS and had a checking account DW was a signatory to. Don't recall how the credit union found out (we likely told them) that she'd passed, but that was unfortunate. We didn't do any probate, there being only about $10k in her account we split with DW's brother. All well and good.

How were you able to close the account and access the funds? When I closed my cousin's accounts, the checks were all made payable to the estate and I had to deposit them in the estate account. The funds weren't released to me directly. Was the account joint with your wife or payable on death?

 

[H2ODude]

Only heirs were DW and her brother, DW was on her checking account. DisneySteve legal answer is the correct one, we just avoided it for simplicity. CU could have gotten in trouble but it was not a lot of money, we'd been customers for 25 years. When done DW just wrote a check to close the account, it was a joint account. I don't recall who the checks were made out to, I think the first was to her estate. We just wanted to avoid going through any probate process.

 

[Bamaman]

If you really get down to it, Probate is the process where a judge gives the executor of the estate authorization to sign for the deceased to liquidate the estate. The judge does want to make sure all creditors and especially The King is paid what they're owed.

If the executor or children are check signers, things can go smoother--paying the outstanding bills for example. And it's also nice if all investment accounts, etc. have beneficiaries listed. If the deceased has already sold homes and real estate, often estates don't even have to be probated.

It's a shame that the estate must file for an EIN number and that the estates are taxed at higher rates than an individual. And filing tax returns for the individual and the estate are also bummers.

If family members want to own inherited property, then a simple estate must be probated. That happened in my case. When we closed out our 99 year old aunt's estate, we had to go thru probate because of an investment partnership in a 10 story office building. Had to jump thru hoops to get the partners to pay us off. Life can sometimes get a little complicated. It's best to keep things as simply as possible, however.

 

[audreyh1]

Dad received an RMD check in January and signed the check. But then passed away at the end of the month without depositing the check. Is it OK if the daughter takes the check to be deposited in February?

If the father endorsed the check, then sure it can be deposited!

 

[audreyh1]

It's a shame that the estate must file for an EIN number and that the estates are taxed at higher rates than an individual. And filing tax returns for the individual and the estate are also bummers.

If the estate disburses income to the beneficiaries each year, then the estate does not have to pay taxes on it.

 

[SecondCor521]

Dad received an RMD check in January and signed the check. But then passed away at the end of the month without depositing the check. Is it OK if the daughter takes the check to be deposited in February?

Aside from everything else, remember that the beneficiaries of the account will have until the end of this year to take the remainder (if any) of your Dad's RMD for 2022.

 

[PERSonalTime]

If the father endorsed the check, then sure it can be deposited!

What’s your reasoning for being so sure that this is OK? However, I do like your answer!

 

[Sunset]

Do you want the legal answer or the practical answer?

Legally, when someone dies, all of their accounts should be locked and frozen. Nobody should have access. You shouldn't be allowed to conduct any business, in or out of that account. Any monetary transactions after death should go into an estate account until the estate is settled.

Realistically, many people don't notify the banks immediately upon someone's death. Either they just don't think about it or they do it intentionally for reasons such as this. The problem with doing so is that if there are multiple beneficiaries and one of them finds out that someone has been getting into the account, that could raise concerns about how the estate is being handled.

Any accounts without a designated beneficiary (like life insurance or a retirement account) or joint with right of survivorship or payable on death titling need to go through probate (unless held in a trust which changes the rules).


I'm in the final stages of settling my late cousin's estate. Every check that came in after he died got sent to the estate account. I won't see a penny of that money until the estate is formally closed and he died last May.

Depends upon your State. Here in IL an estate with less than $100K in it, does NOT have to be probated. A much simpler and easier and cheaper and much faster way can be used without requiring a lawyer.

We kept Dad's bank account open and the bank added the executor to the account, allowing all the auto payments to continue uninterrupted, and checks to him to be deposited.

 

[SecondCor521]

Depends upon your State. Here in IL an estate with less than $100K in it, does NOT have to be probated. A much simpler and easier and cheaper and much faster way can be used without requiring a lawyer.

It kind of depends on what you mean by "probate".

On the one hand, the simplified procedure available in several states doesn't necessarily involve the part about proving the will or appointing an executor, and there doesn't need to be a lawyer involved.

On the other hand, it does involve at least a somewhat-court-supervised process of transferring the decedents assets which are part of the probate estate (i.e., those assets without beneficiaries or TOD/POD).

In my state, it's called "Summary Administration Procedure for Small Estates" but it's in a Title called "Uniform Probate Code".

:shrug:

We kept Dad's bank account open and the bank added the executor to the account, allowing all the auto payments to continue uninterrupted, and checks to him to be deposited.

That is a nice way to do it. The bank I'll have to deal with someday didn't seem to think that was an option. Maybe I'll talk with them again.

 

[PERSonalTime]

Does anyone know how this works in California?

 

[EastWest Gal]

I believe the executor needs to take a copy of the will and the death certificate to the bank and open an estate account. The check can be deposited to that account, as well as transferring the funds in his checking account into the estate account. Funeral expenses and other estate expenses should be paid from that account. The Executor is signatory on the account.

It is my guess that this process should work in any state, but only a guess, as I dealt with my dad’s estate in PA.

Nolo Press has a book called How to Probate an Estate in California. If you are the executor, it could save you both time and money.

 

[disneysteve]

Depends upon your State. Here in IL an estate with less than $100K in it, does NOT have to be probated. A much simpler and easier and cheaper and much faster way can be used without requiring a lawyer.

We kept Dad's bank account open and the bank added the executor to the account, allowing all the auto payments to continue uninterrupted, and checks to him to be deposited.

Interesting. How is the executor appointed? Do you still need to have the court do it and issue the Letters of Administration? Who handles posting the notice to potential creditors, or is that not required there?

 

[audreyh1]

What’s your reasoning for being so sure that this is OK? However, I do like your answer!

Unless you’ve already contacted the bank with your father’s death certificate, they will very likely accept his endorsed check for deposit.

I’m simply talking of the practical steps here.

 

[cathy63]

Does anyone know how this works in California?

I am very sorry for the loss of your father.

Not sure what you mean by "this" in your question though. If you're asking about the check, you will be able to deposit it if you don't tell the bank that the person who endorsed it is deceased. If they already know, it's up to them to decide whether or not to accept it. The state of California has nothing to do with it.

If you're asking about the process for small estates in CA, info is here: https://www.courts.ca.gov/10440.htm?rdeLocaleAttr=en

If you have the legal right to inherit personal property, like money in a bank account or stocks, and the estate is worth $166,250 or less, you may NOT have to go to court. There is a simplified process you can use to transfer the property to your name. The value of the property is based on what it was worth on the date of death —not on what the property is worth now.

Keep in mind, this process CANNOT be used for real property, like a house or land. Talk to a lawyer for help to determine whether you may be able to use another simplified procedure to transfer real property.

 

[Montecfo]

It kind of depends on what you mean by "probate".

On the one hand, the simplified procedure available in several states doesn't necessarily involve the part about proving the will or appointing an executor, and there doesn't need to be a lawyer involved.

On the other hand, it does involve at least a somewhat-court-supervised process of transferring the decedents assets which are part of the probate estate (i.e., those assets without beneficiaries or TOD/POD).

In my state, it's called "Summary Administration Procedure for Small Estates" but it's in a Title called "Uniform Probate Code".

:shrug:



That is a nice way to do it. The bank I'll have to deal with someday didn't seem to think that was an option. Maybe I'll talk with them again.

National banks may require letters testamentary before liquidating accounts, even if estate is small enough to not require probate under state law.

Joint accounts or POD designation can defeat this.

Whether an estate requires probate varies widely from state to state. Some small or simple estates do not require probate. Period.

 

[disneysteve]

National banks may require letters testamentary before liquidating accounts, even if estate is small enough to not require probate under state law.

Same with investment accounts.


I haven't been able to do anything financial with my cousin's estate without presenting the Letters of Administration. It didn't matter if the account had $300 or $300,000. I imagine there's probably some way to get that without involving a lawyer but mine took care of it all for me.

 

[SecondCor521]

Interesting. How is the executor appointed? Do you still need to have the court do it and issue the Letters of Administration? Who handles posting the notice to potential creditors, or is that not required there?

It probably varies by state.

In my state, there is no executor appointed by the court. It appears that the way the law is written, that the person who would have been appointed executor can utilize the small estate administration procedure.

No letters testamentary would be issued in this process.

No notice to potential creditors is done. The person who would have been appointed executor can file a summary document with the court stating basically that all property has been distributed and all known debts have been paid.

It's a bit unclear to me, but it seems that summary document filed with the court starts a one year clock for any unknown creditors to come forward and make a claim. (The formal probate process does involve a notice to creditors and that has a four month clock IIRC.)

 

[disneysteve]

No notice to potential creditors is done. The person who would have been appointed executor can file a summary document with the court stating basically that all property has been distributed and all known debts have been paid.

It's a bit unclear to me, but it seems that summary document filed with the court starts a one year clock for any unknown creditors to come forward and make a claim.

In Florida, it's 90 days for the creditor notice. Nothing can be distributed until that time runs out, which makes sense. You can't give the money out first and then wait for claims to come in.

 

[Sunset]

Interesting. How is the executor appointed? Do you still need to have the court do it and issue the Letters of Administration? Who handles posting the notice to potential creditors, or is that not required there?

The executor does not get appointed, instead they declare themselves and file the Will with the clerk of the probate court, and of course the probate court has not yet issued any "letters of office".

I have no idea what would happen if someone tried this without being named executor of the Will.

Here in IL, it's common knowledge that Probate courts take over a year and are very expensive to process an estate.

More details are here: https://www.illinoislegalaid.org/legal-information/small-estate-affidavit

 

[disneysteve]

The executor does not get appointed, instead they declare themselves and file the Will with the clerk of the probate court, and of course the probate court has not yet issued any "letters of office".

That link mentions this:

"Information about the decedent's assets such as bank accounts, stock, cash"

I can tell you from experience that in order to change the name on inherited stocks, I had to get a Medallion Signature Guarantee. To do that, I had to present the Letters of Administration. That was with Bank of America in New Jersey. I wonder if other places have different requirements, or if it would have been different if I was in Illinois.

The whole process is complex enough. Learning that it can be so drastically different state to state makes it even more complicated.

 

[SecondCor521]

In Florida, it's 90 days for the creditor notice. Nothing can be distributed until that time runs out, which makes sense. You can't give the money out first and then wait for claims to come in.

Right. My state doesn't have that, but some states do, for the reason you indicate.

I think if a creditor shows up later after a simplified administration, they could go after the executor, but I'm not really sure how it would work. My plan would be just to be sure to pay everyone, which sort of requires living a life where unknown creditors aren't really a thing.

That link mentions this:

"Information about the decedent's assets such as bank accounts, stock, cash"

I can tell you from experience that in order to change the name on inherited stocks, I had to get a Medallion Signature Guarantee. To do that, I had to present the Letters of Administration. That was with Bank of America in New Jersey. I wonder if other places have different requirements, or if it would have been different if I was in Illinois.

The whole process is complex enough. Learning that it can be so drastically different state to state makes it even more complicated.

Whether the account has beneficiaries/TOD/POD or not also makes a big difference. If the former, typically a beneficiary just has to provide a death certificate to get the process started. If the latter, typically it's as you describe - letters testamentary need to be provided. So it sounds like in your case there were no beneficiaries listed on the account, which would generally make it go through the probate process.