What Happens To CD Upon Death Of CD Owner?

gcomfort | Feb 3, 2015 | 3 posts since 2011

Am I correct in my belief that when a CD owner dies, the beneficiary of the CD, upon presenting a death certificate, can receive the balance of the CD without any penalty because the CD did not run to term? Or, instead, is just the title of the CD transferred to the beneficiary as the new owner, and the beneficiary can not receive the balance without opening the CD and paying an early withdrawal penalty?

Thanks.

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Answers

Ken Tumin | Feb 3, 2015 | 6,008 posts since 2009

Yes, for the vast majority of CDs that you get directly from banks or credit unions, the beneficiary can close a CD when the owner dies without an early withdrawal penalty. The beneficiary will typically just need a certified copy of the death certificate and their ID.

I have more details in this blog post.

gcomfort | Feb 3, 2015 | 3 posts since 2011

Ken,

Thanks for your reply. I have now read your post. It answers my questions fully.

I do now recall having glanced it over before - but at the time the subject seemed way off to me. A few days ago I was diagnosed with cancer. That has a way of focusing one's thoughts on how transfers at death really work. :>)

Ken Tumin | Feb 3, 2015 | 6,008 posts since 2009

Sorry to hear about your diagnosis. I wish you well in your cancer treatments.

Ally6770 | Feb 4, 2015 | 2,653 posts since 2010

Wish you the best with the treatment. There have been a lot of good results with the treatments in our family.

Make sure that someone you trust knows about the CD and the beneficiaries. Most banking institutions will not track down beneficiaries, or if you feel OK about it let the beneficiaries know about the CD.

paoli2 | Mar 21, 2015 | 2,545 posts since 2011

Best wishes and success with your cancer treatments. If you are leaving more than one CD to the same beneficiary, it might be helpful to make copies of them and put in a folder to be given to that person at some time. I have made a binder for our beneficiary and over the years as the CDs mature I replace them with copies of the new ones for the same beneficiary. I also keep a sheet with the addresses and phone numbers of the banks and/or credit unions the CDs are with plus instructions about getting the death certificate and what to do at the necessary time. This way they will be fully prepared what to do and where to go when the time comes.

rmbn | May 24, 2016 | 4 posts since 2016

That is the kindest thing you could possibly do! You would not believe the tears and frustration I had in trying to sort out my parents' financial affairs after they have passed.

Ally6770 | May 25, 2016 | 2,653 posts since 2010

I cannot imagine would it would be like no knowing the financial situation of someone when you have to settle their affairs after death.
My children have a copy of the signature cards showing them as beneficiary. Each year I give them a copy of all accounts with the account numbers and list each as checking, savings, CD's, traditional and Roth IRA's. It has the bank's name and phone number next to each. Getting a copy of the signature card is important because I had a credit union that
lost the signature card of my husband's IRA's when he passed. I had a copy of the signature card leaving it to me and then to the children. They would not accept it and I had to go to NCUA. I disclaimed all the traditional IRA's so the children would inherit them after his death and it was a mess. Also remember that 6 months after a death the insurance on the money is no longer covered.

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