Ownership and Inheritance

Question: We had an elderly customer who had certificates of deposit with different family members named as beneficiaries on each CD. Recently, he went into the hospital for major surgery and before going in, directed us to place the proceeds of the maturing certificates into his passbook savings account and not let them roll over into new certificates. We did this but the customer died in the hospital. Do we have any duty to the individuals who would have been the beneficiary of the CD but are not beneficiaries of the passbook account?

Answer: This is an issue controlled by state law. The laws of ownership and inheritance are set by each state. While there may be some unhappy relatives, your best practice would be to obey your customer's orders and also refer the matter to the bank's counsel. You should be prepared if relatives start asking questions.

Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 3, 3/05