Couple of questions regarding how other banks handle deceased customers. We currently look at obituaries in our local newspaper and the local newspaper of one of the counties next to us each morning to see if a customer has died. We just recently participated in a webinar where the speaker stated that she was not a fan of doing this because of the liability the bank could face if mistakes are made. She also stated that the bank bears little if no liability until they receive "knowledge" of the death. So basically - let the family, executor, administrator etc notify us of death. Curious if anyone else looks at obituaries each day and if not what would be the best way of handling deceased accounts? We are looking at possibly changing our procedures. One worry we have is if somebody gets a hold of an ATM/debit card. By checking obituaries we can shut the cards down quickly. If we don't check the obits - are we responsible if somebody uses the card and takes money that does not belong to them? What about interest on accounts? If interest should be stopped at death - how do we handle this if we are not informed of death for quite some time? The webinar raised many questions so I'm just looking to see how other banks handle death procedures.

Thanks in Advance
Lisa

We do not monitor obits as a bank practice. That being said, many of our customers are known to the bank staff in the community so word tends to get around fairly quickly. We do have customers who moved out of state and elected to maintain their accounts with us. Those we would have no idea unless we were alerted by someone.

Living in a smaller community, we monitor for deceased customers. The local funeral homes publish obits online as the newspaper is prohibitively expensive. The bank sends a condolence to the family. We suspend the debit card and any online banking capabilities immediately to prevent unauthorized withdrawals. It hasn't happened yet but we could revive both debit card and online credentials if the customer has a miraculous recovery.

I'm not knocking seminar presenters but you have to consider their advice's validity in regard to your circumstances. Just because you paid money for an opinion doesn't make it the one "right" answer for you. This seems to be a business decision.

Just Jean - I totally agree with what you are saying however I do feel as if there are circumstances that could come back and bite us. Such as if we miss a death. Sure - we can say the family never notified us - but per our procedures we check obits. We should have caught this information and stopped their debit card and online banking etc. What if a customer who lives in the county over in the opposite direction passes away? We only check two newspapers.......unless we specifically say these are the only two newspapers we check then we are again liable for not catching the death in the other county. She also mentioned by checking obituaries then we take responsibility when accepting a small estate affidavit. If the obit states there are three surviving children - but two children come in with a small estate affidavit and the 3rd child isn't listed and we accept it - then she said we could be held liable for this. Yes the children stated that they were the only two entitled BUT we had previous knowledge thru the obit that there are 3 children and we shouldn't accept it.

I do like the fact that we are able to shut down cards and online banking quickly by checking obits. I also like the fact that notes can be put on the account. However - I wonder if we are taking a bigger risk simply by doing this. Not knowing until notified by family or someone else takes a lot of the liability off of us it seems.

It's definitely something we need to discuss and figure out specific procedures on.

Thanks for your input though! I do appreciate it.

Sorry, but I don't understand how the failure to discern that someone has died is a "crisis" situation. From time to time, a client dies in another state or it's otherwise not reported. Eventually we get a DNE from Social Security. That's our chief concern is to avoid that liability.

It must be a state law issue as our state banking association says we aren't responsible for what is stated on the heir affidavit. They are signing a legal document stating that the heirs are X, Y and Z. We issue one check to the affiant signing the form. It's on them to pay their co-beneficiaries.

We used to check obits, but do not anymore because of the potential liability. If we receive ACH DNE notification on SSA recipients or otherwise have knowledge of the death, then we take action with regards account status and debit cards. We are also a rather small community and generally a member of staff will hear of one of our customer's death. As far as affidavit for small estates, the onus is on the person making the representation that they are entitled to the funds.

We do signature verification on our checks. If I see a check payable to a cemetery, funeral home or for "funeral luncheon", I will google for an obituary. If I find one, I notify the branch and our Account Services Dept. They will flag the account if necessary.

Also, if we suddenly see checks being signed by a POA. We'll check and make sure there is a POA on the account and also maybe google for an obituary for the account holder.

Doesn't a POA "die" when the customer did?

Yes.

I don't have time to do the research, but a bank in the Northwest lost a chunk of change on a lawsuit because the bank routinely checked obits and missed one and someone had withdrawn all of the funds.

As others have pointed out, even in a small bank, you are wasting your time. There are too many mistakes that can be made. Small banks can least afford the possible hit.

Wait for SSA to notify or someone shows up with a death certificate. Quite the busy work and focus on selling more products - that is what makes the bank money.

I agree that this is not a best practice. Now, if you are extremely bored and need something to do then I don't see the harm in checking obits but don't have the practice listed as a bank policy.

One of my clients leaves no stone unturned, they call each of the four funeral homes in town every morning and still check the obits. The lady who does it (in her 70's) also spends Wednesday afternoons visiting bank customers who are in a nursing home so she probably gets some advance notice.

The practice is quaint if not charming. However, it also sets a standard of care that is more likely to create rather than diminish liability.

If you're inclined to proactively search for customer deaths, a better alternative to your local obituaries would be to see if any of your vendors has access to the SSA Master Death Index. It's more comprehensive, less error prone, and less labor intensive than manual obituary searches.

Thank you everybody for your input. rlcarey - missing a death was one of the examples that was brought up in the webinar. It does worry me that something will be missed or a mistake made. I believe waiting to be notified is the best thing to do. Why set ourselves up for error. This will definitely be something we will be discussing in our meeting this week.

I appreciate everybody's input!

We've also been discussing changing our procedures.....we currently check obits but only in two local newspapers and we currently have 7 different branches in multiple different markets, so I know we're not catching all of our customers unless they put something in one of those two newspapers. I fear that we are setting ourselves up for unnecessary liability. Management fears that we won't get notification timely to hot card the debit card and transactions will occur after the date of death that the bank will be responsible for reimbursing. Is this true? Is the bank responsible for all debit card transactions after the date of death, or just once the bank is properly notified of the customers death?

Management fears that we won't get notification timely to hot card the debit card and transactions will occur after the date of death

Oh lord, let's spend countless hours of busy work to avoid something that may or may not ever happen. You should already base your debit card program on a certain amount of losses. The issuance of debit cards always have inherent loss potential.

You would be most likely liable, but also most likely, it is usually a close family member and once the estate is told that you will pursue legal restitution from the family member, the estate will settle it on their own.

So....going along with this topic. What kind of procedures do others follow for stopping interest from being paid on a deceased's account? If interest isn't supposed to be reported on an account where the account owner is deceased - and nobody has come in to update/close the account - then what steps should be followed regarding interest being paid? We currently do not stop interest, but we do mail a letter out stating backup withholding will start if the account is not changed within the next 30 days. But we have a few accounts that are a few years old that we are still taking backup withholding out on. How is this normally handled?

Any suggestions??

You can't stop paying interest unless state law tells you to or there is a contractual provision that calls for it. You can start backup withholding because you don't have a valid TIN for reporting the interest.

Great! Then it sounds like we are at least doing this correct!

Thanks a lot John!