Dad passed away - checking account confusion

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Dad passed away - checking account confusion

Postby hockeysaki » Sat Oct 04, 2008 7:19 pm

My dad passed away about 2 months ago. Since then, I have been paying his bills (mortgage, lots of medical bills, utilities, etc) from the money in the joint checking account he and I share. I have also received deposits in this account (a monthly deposit from his brokerage and his monthly pension payment) since his death. I have also deposited some checks issued to my dad since his death into this joint account.

I'm also the trustee for half of his trust. I have not set up a checking account for this trust yet, but hope to do so this week. Should I move the funds I received from his monthly brokerage deposit, pension and the checks made out to his name into this checking account for the trust or should I keep them in the joint account we have?

What should I do with the refund checks (return of insurance premiums) I am expecting to receive? These are going to be made out to "the estate of ..." Should I put them in the joint checking account or the trust checking account?

Is there anything I have done wrong and need to fix with the way I've handled the money?

Thank you for your input.
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Postby zookeeper24 » Sat Oct 04, 2008 8:14 pm

I'm sorry for your loss. Losing a parent is tremendously hard.

hmmm, I'm not sure about the checks that are made out in just his name... but the ones that are made out "Estate of....." WILL need to go into a seperate account.

You will need a tax-ID for that. The bank wouldn't allow me to open an "Estate of...." account for my late husband without the Tax ID number. This is a different number than a SS number. The IRS will appoint you a Tax-ID for his estate, but you have to request it.

Are you the Administrator (or Executor) of his estate? If not, then you are doing the job of one. If you are, then your lawyer should be able to tell you exactly what to do. You can also find info at the library on handling an estate in your state.
It's been a few years since I went through the handling of an estate, so the laws could have changed, and my memory may fail me.
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Postby sscritic » Sat Oct 04, 2008 8:31 pm

Under most circumstances, your father lost his right to his pension at his death. If so, you should stop the payments and enquire about how to return the money received after his death.
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Postby mephistophles » Sat Oct 04, 2008 8:35 pm

I am not an attorney, but you need to enter your father's estate into probate. The court will approve an executor/trix or appoint a personal rep. This court will help you with a list of things that need to be done. If you are lost in all this, or there is a large or complex estate, suggest you use an attorney.

It is best to keep assets separate including trusts, personal accounts and estate accounts for the present.
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Postby JDCPAEsq » Sat Oct 04, 2008 8:36 pm

You are creating a bit of a mess for yourself. First of all, the joint account passed to you outright at his death. You should back out any payments or deposits with this account and transfer the account over to your name. Also, remittances from brokerage accounts should be stopped. You also shouldn't be paying his debts from this joint account. Those are obligations of the estate. You mention trusts. Is the entire estate in a revocable trust? Is there a will? Are you the only beneficiary of his estate? If there is a will, who is designated the personal representative? It appears that you will need a probate administraiton of the estate if there are assets in your father's name. Some states have a small estate administration procedure which avoid the need for a formal probate. Have you discussed the situation with an attorney? You need to take these steps soon because it appears you are comingling funds that should be kept apart. It also doesn't appear the broker even knows he died. Please don't continue until you have received competent guidance.
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Postby JDCPAEsq » Sat Oct 04, 2008 8:39 pm

I overlooked the pension payment. This quite likely ended with his death and must be repaid. Possibly also Social Security payments.
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Postby joe8d » Sat Oct 04, 2008 11:10 pm

Hockeysaki,
I was in the exact same circumstances as you 15 years ago.A couple of comments.Verify any bills you receive particularly medical.I received bogus bills from scam artists after my fathers death.As far as I know SS is some how notified as was his company pension plan.You need to produce a death certificate(Have several copies ,you need these for everything )to the bank to have the account switched over to your name only.You will need to retain a lawyer even though you,if executor, will be doing most of the work.
All the Best, | Joe
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Postby dbr » Sun Oct 05, 2008 1:34 am

Here is the advice re SS if such applies:
http://www.ssa.gov/pubs/deathbenefits.htm

You might want to also note this "go directly to jail" article:
http://disabilityblogger.blogspot.com/2 ... urity.html Naturally you are unlikely to go so far as this.

The advice regarding pensions is similar except substitute whoever the pension administrator might be.

Read and reread What JCPDAEsq said.
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Postby hockeysaki » Sun Oct 05, 2008 1:58 am

Thank you everyone for the advice. Please allow me to provide some more details to clarify my situation. I am still receiving pension payments because my dad took a 10-year certain pension and I am the beneficiary. The Social Security benefits are actually my half-brother's because he is a minor, but I am caring for him since our dad passed away. So it's actually his money, but it is going into the joint account until I am granted guardianship of him and can set up a separate account for that money. I did go to the Social Security office the week after my dad passed away to explain our family situation. Regarding the brokerage, I notified them the day after my dad died, but they still made a direct deposit that month. I'll ask them what to do with it.

Thanks again.
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Postby sscritic » Sun Oct 05, 2008 9:49 am

hockeysaki wrote: The Social Security benefits are actually my half-brother's because he is a minor, but I am caring for him since our dad passed away. So it's actually his money, but it is going into the joint account until I am granted guardianship of him and can set up a separate account for that money.

Social Security pays the money to the Representative Payee.
Social Security Administration wrote:Social Security's Representative Payment Program provides financial management for the Social Security and SSI payments of our beneficiaries who are incapable of managing their Social Security or SSI payments.
Generally, we look for family or friends to serve in this capacity.

You don't have to be his guardian to receive his payments. Are the checks coming in your name as representative payee? Did your bank refuse to open an account for him?
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Postby hockeysaki » Sun Oct 05, 2008 5:49 pm

sscritic - you're correct. I am the representative payee for my half-brother. Prior to my dad's death, my dad was the representative payee for my half-brother, whose mother passed away several years ago. When our dad died, I went to the SSA office and became the representative payee. The SSA sent me a letter saying "___ should keep the old account open until the first benefit payment is credited to his new account." This is one reason I have not opened an account up yet. The other is that I was mistaken in thinking I had to be the guardian to open up an account. Thanks for correcting that. I have received that first payment and plan to open up an account this week.
Last edited by hockeysaki on Sun Oct 05, 2008 5:53 pm, edited 1 time in total.
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Postby hockeysaki » Sun Oct 05, 2008 5:51 pm

I have a meeting this week with my dad's attorney, so hopefully this will all get straightened out then. Here's a private message I sent to JDCPAEsq and his reply.


hockeysaki wrote:
Thank you for your advice. My dad and stepmom (both deceased) did have a will and a revocable living trust. I am the successor trustee of the A trust. A family friend is the successor trustee of the B trust. There are 4 beneficiaries.

I'm confused as to the difference between the executor and the successor trustee. When I see there is an executor of the will and a trustee of the trust, it seems like they are two different people (or I can see how 1 person can be named to do both). Who is the person who collects the assets, pays the bills, opens the checking account for the trust, etc - the executor or the successor trustee?

Should the bank allow me to set up a checking account for the A trust since I am the successor trustee and if I have a proper EIN?

I have one more question. It took my dad's brokerage 2 months to send me and the other beneficiaries the paperwork to retitle my dad's assets. We signed it and sent it back, but haven't received a dollar yet. Most of this money is passing to us "by contract" and it is not in the trust. However, some cash from the brokerage is being used to fund the A trust and the B trust. If it takes this long for me to get the money to fund the A trust, I don't see how it is possible for me not to use that joint checking account to pay my dad's mortgage, utilities, etc. I realize how I am causing a mess as you pointed out, but if I shouldn't use my own money to pay the bills, I don't know where else I can get money to pay the bills.
Would you please advise.

JDCPAEsq wrote:
Thanks for your note. It might be easier to post it on the board and then I could reply there along with others.

I'm confused as to the estate plan. Your say your father and stepmother are now both deceased. Also you say there is an A and B trust. A & B trusts normally are for a surviving spouse and then terminate at the death of the spouse. Is that the case here? Are both trusts in the process of terminating or do they continue on? Also, you mention property passing by contract. Was the brokerage account set up with you and maybe others as beneficiaries?

The executor and successor trustee are two different roles. The executor manages the estate which includes all property in the name of the decedent but which would exclude jointly held property and property passing by contract such as a "Transfer on Death" designation of a brokerage account.

Normally the executor collects all assets in the name of the decedent and pays all debts of the decedent from those assets as well as expenses of administering the estate. Any remaining assets usually pour over into the trusts and the estate is then closed. Because of cash not being available it is sometimes done that a family member will pay debts of the estate but then should later be reimbursed.

You are correct that if you are the trustee and have a trust ID number the bank should allow you to set up an account for the trust. You might not need a checking account, however if you have a brokerage account for the trust.
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Don't co-mingle; Don't commit fraud

Postby djw » Sun Oct 05, 2008 6:26 pm

Don't co-mingle; Don't commit fraud.

You're on shaky legal ground using a single checking account to handle multiple legal roles. Depositing checks written to your late father AFTER his death, even if you don't forge his signature on the back, can be considered fraud. Co-mingling funds can leave you open to charges of embezzling money from Peter to pay Paul. You don't need that kind of trouble.

You need to stop what you're doing, file with the IRS for ID #s, open separate accounts for each legal entity (Estate, Trust, Guardianship, your Personal funds), return checks payable to your father and have them reissued to the Estate or the Guardianship for your Half-Brother, etc.

I'm sure you can say that you're keeping careful track and know what money belongs to what entity, but courts HATE co-mingling. It's never a good idea and can only put you in legal jeopardy down the road. Stop now and get everything straight before you get in any deeper. The I-didn't-know-any-better defense will only take you so far.
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Postby sscritic » Sun Oct 05, 2008 7:04 pm

hockeysaki wrote:sscritic - you're correct. I am the representative payee for my half-brother. Prior to my dad's death, my dad was the representative payee for my half-brother, whose mother passed away several years ago. When our dad died, I went to the SSA office and became the representative payee. The SSA sent me a letter saying "___ should keep the old account open until the first benefit payment is credited to his new account." This is one reason I have not opened an account up yet. The other is that I was mistaken in thinking I had to be the guardian to open up an account. Thanks for correcting that. I have received that first payment and plan to open up an account this week.

If I read this correctly, you and your half-brother shared a father. When you went to social security, did they tell you if your half-brother's benefit will be increased? He is now the survivor of both his mother and your father and has "dual entitlement." He won't get both benefits, but should get the larger of the two.

SSA wrote:The Social Security Act provides that a child entitled to child's benefits on more than one SSN will receive benefits on only one. That child is actually entitled (paid) on one SSN and “technically entitled” on the other.
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Re: Don't co-mingle; Don't commit fraud

Postby JDCPAEsq » Mon Oct 06, 2008 7:30 am

djw wrote:Don't co-mingle; Don't commit fraud.

You're on shaky legal ground using a single checking account to handle multiple legal roles. Depositing checks written to your late father AFTER his death, even if you don't forge his signature on the back, can be considered fraud. Co-mingling funds can leave you open to charges of embezzling money from Peter to pay Paul. You don't need that kind of trouble.

You need to stop what you're doing, file with the IRS for ID #s, open separate accounts for each legal entity (Estate, Trust, Guardianship, your Personal funds), return checks payable to your father and have them reissued to the Estate or the Guardianship for your Half-Brother, etc.

I'm sure you can say that you're keeping careful track and know what money belongs to what entity, but courts HATE co-mingling. It's never a good idea and can only put you in legal jeopardy down the road. Stop now and get everything straight before you get in any deeper. The I-didn't-know-any-better defense will only take you so far.


Although I have told the OP he needs to sort out these various entities and deposit to the correct accounts, your warnings of fraud are a little overstated. He's doing the best he knows how and will straighten it out. Charges of fraud don't belong in this conversation.
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Yes, it really is fraud

Postby djw » Mon Oct 06, 2008 10:47 pm

Yes, it really is fraud.

I intentionally used the word "fraud" to underscore the danger of yielding to the temptation to let the checks payable to the deceased keep arriving, keep depositing them, and keep drawing funds against them on the theory that eventually you will get around to straightening things out, so what's the harm? People who have succumbed to this temptation HAVE ended up in jail, believe it or not. We're all busy people, but allowing this situation to continue may eventually lead to unnecessary grief of one type or another. Better to nip it in the bud ASAP.

Remember that postings are read by lots of lurkers, not exclusively by the OP. Also, the OP doesn't always tell the full story or sometimes "adjusts" the details of their situation. If a poster says his dad died and the checks are still coming, "2 months ago" can sometimes mean "2 year ago."

The OP specifically stated that checks made out to his late dad have arrived after his death and he has deposited them and written checks against these funds. It's impossible to do that legally, no matter how you slice it. It also sounds like he has not been appointed executor or administrator at this point so he lacks that legal authority.
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Update

Postby hockeysaki » Tue Oct 07, 2008 12:11 am

Here's an update. I worked feverishly today to straighten things out. I called the IRS to get an EIN since I am the successor trustee. I'm looking for an accountant who can handle the fiduciary returns . I set up a separate bank account as the representative payee for my half brother and transfered over ALL of the money I have received from SSA for him since our dad died. I haven't even reimbursed myself a penny yet for the expenses I have paid on his behalf over the last 2 months.

What really scares me if it is fraudulent to deposit these checks made out to my dad is that the reason I got into this whole mess with the checking account is because I listened to the MANAGER at my dad's bank (not an inexperienced teller). I asked him what to do with these checks I have been receiving in my dad's name. He told me to deposit them into the account that my dad and I shared and to keep my dad's name on the account for a year so that I would be able to deposit any additional checks that I received. If I took my dad's name off the account, I would not be able to deposit the checks. He NEVER once said I should keeps those funds separate from my own. However, he did tell me not to sign them and to instead ask the teller to stamp them with a stamp that says something like, "payable to the payee..." or something like that, so that's what I've been doing. Why aren't procedures for dealing with this type of situation clearly explained somewhere so that it is clear what you can and cannot do?

BTW - if this is "fraud," then they better build a lot more jails because I'm sure there are hundreds of thousands, if not millions of others who have made the same mistake. At least I'm fixing my mess.
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Postby Finance Dave » Sat Oct 11, 2008 6:23 am

Wow, just read this entire thread. OP, I admire you for your diligence in trying to get this straight. Sounds like you made a few mistakes along the way, but given the complexity and emotional issues you are facing, I can say I likely would have made some too.

I wish you well and my condolences for your loss.

I agree that if someone knowledgeable could write a simple step by step of the basics (I know there is no way to go through the complexities of trusts and so on) that we should all do when a loved one is lost, that would be helpful. I still have both parents, but I know the day is coming...they are in their mid '70s and things can happen quickly I know.

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