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Credit Union Not Allowing Early Withdrawl Of CD After Owner's Death

tww
tww   |     |   2 posts since 2015

My parents jointly held a 3 year CD at a Virginia credit union that matured and auto-renewed while my father was terminally ill a few months before he passed away. My mother would like to withdrawl the CD but the credit union has refused to allow her to do so without thousands of dollars in penalties. Yet they are asking her to fill out paperwork to remove my father from the account. Does she have any recourse?



Answers
MidAtlantic
MidAtlantic   |     |   77 posts since 2012
In my experience where one person in a joint CD account passes away the account continues in the name of the second person. That seems to be what is happening here.
me1004
me1004   |     |   537 posts since 2010
tww, for someone to give you an intelligent response, they would need more information. Which credit  union? You will have to look to the disclosures, including the fee schedule, to see what it says about POD accounts, which I am presuming this was; if not, then I would think state probate laws might apply. Also, is the credit union federally chartered or state chartered -- it makes a difference to the rules; I'm not sure what, if anything, the feds or state might have to say about that.

It also might make a difference whether it was a POD account or a Totten trust account  (ITF -- in trust for) -- I don't know the difference between the two.

Still, once checked out and you are knowledgeable, it would be worth going up the ladder to the CEO to ask for a courtesy waiver. There would be no guarantee of getting that, but it might be more possible than you would think.

I will say, I have done that, and the banks I dealt with allowed the closer of the CD without penalty, because it was a POD and the account holder had died.
Ally6770
Ally6770   |     |   1,968 posts since 2010
8025-0  Contacted FDIC by mistake. Assume the answers are the same-----
 Thank you for contacting the FDIC.  In your email you asked the following question: “If a person had a joint account and one person died is the bank required to let the CD be cashed in without penalty?”The FDIC will insure a deceased person's accounts as if he or she were still alive for six months after the death of a deposit owner. During this grace period, the insurance coverage of the deposit owner's accounts will not change unless the accounts are restructured by those authorized to do so.Thus if a co-owner of a joint account should pass away during the term of a CD, after the grace period the account would be insured as the surviving owner's single ownership funds, up to a maximum of $250,000.  It is important to note that most CD contracts have provisions permitting early withdrawal (without penalty) following the death of an accountholder.  You should contact your financial institution to determine their policies in this situation.For deposit insurance purposes, a joint account is a deposit owned by two or more people, with no beneficiaries designated.Each co-owner's share of every joint account that he or she owns at the same insured bank are added together and the balance insured for up to $250,000, if the following requirements are met:1.   All co-owners must be living people. Legal entities such as corporations, trusts, estates or partnerships are not eligible for joint account coverage.2.   All co-owners must have equal rights to withdraw deposits from the account. For example, if one co-owner can withdraw deposits on his or her signature alone but the other co-owner can withdraw deposits only with the signature of both co-owners, the co-owners would not have equal withdrawal rights. 3.   All co-owners must sign the deposit account signature card unless the account is a CD or is established by an agent, nominee, guardian, custodian, executor or conservatorIf you wish to learn more about FDIC deposit insurance coverage, please review our brochure, “Your Insured Deposits” (Comprehensive Guide) which explains in detail all of the deposit insurance ownership categories.  This document and other deposit information can be found on our web page at:https://www.fdic.gov/deposit/deposits.html We hope you found this information helpful. If you have additional questions please feel free to write back or contact us at 1-877-275-3342. Sincerely,Federal Deposit Insurance CorporationDivision of Depositor and Consumer Protection550 17th Street, N.W.Washington, DC  20429 As part of our ongoing efforts to improve our service to the public, we would appreciate it if you would complete a short consumer satisfaction survey on the level of service you received from this office.  The survey can be accessed at:  <http://www2.fdic.gov/starsmail/customer.html>.
Ally6770
Ally6770   |     |   1,968 posts since 2010
I would read the disclosure, then I would ask to speak with management, and if you don't get the 
check immediately let them know you will be contacting NCUA. I think Ken posted something on this. I had to do this when my husband died when I tried to disclaim his IRA's so that the children would inherit them immediately. I think I posted my problems with one of the 5  credit unions that gave me trouble. 
Make sure that the IRA had beneficiaries (or it will go through probate)  and then read the disclosure and contact NCUA. They will get back to you that day or the next. I was contacted on a Saturday morning when the Labor Day Holiday was on Monday. I had emailed them on  Friday night about midnight.  They have an amazing Staff. 
MidAtlantic
MidAtlantic   |     |   77 posts since 2012
I think you are missing the point that this was a joint account with the surviving wife.
me1004
me1004   |     |   537 posts since 2010
Oh, MidAtlantic, very good point, I managed to overlook that, thought we were talking of a POD. Yes, because this was set up as a joint account, rather than a POD account, the death does not spark a payout according to the trust (the POD or ITF are trust accounts). She already had full access to do what she wanted with the account before he died, and she still does -- but that access was used to lock it into a CD. That penalty they are talking of presumably is the typical early withdrawal penalty.

I would still buck it up to the top and ask for a courtesy waiver -- nothing to lose, and they might consider it a gesture of good will and sympathy to waive the EW under these conditions. Give them a sob story, such as that her Social Security has been cut as  a survivor (it has) and what the couple got under his pension has been severely cut to hardly anything as a survivor (like it was with my mother) , she needs the cash for bills and needs to restructure her finances. And don't forget to point out what a good customer they have been for some time, and she would like to feel she can continue that once she can  srestructure.
Ally6770
Ally6770   |     |   1,968 posts since 2010
Thank you I did miss that point. I did work in a bank for 30 years though and we were always able to break the CD with no penalty with the death of one of the owners. We lived in a small town with 6 banks and credit unions though so maybe this was taken under consideration. Word gets around fast when something simple is denied or bad customer service was given. 
Ricochet
Ricochet   |     |   230 posts since 2010
sorry for mom.
Thousands doesnt sound right even for a Large CD.
If already into it more than 6 mo or so, could have a
hard time. but as others said death of a joint owner should give you options
tww
tww   |     |   2 posts since 2015
Thank you everyone for the insightful replies. Good news: The initial response from the credit union had been from someone at a branch. Once our financial advisor helped us get in touch with someone at a higher level the credit union was most cooperative in releasing the CDs without penalty. Incidentally the branch had also incorrectly told us that the penalty (which they didn't charge after all) would have been all of the future interest between now and the future maturity date.
howardt55
howardt55   |     |   5 posts since 2015
I'm experiencing a similar issue.  Since we are working with an attorney to settle the estate and the -now- non revocable trust-- I think the credit union wants to be sure that the trust liquidates the CDs and some forms and new tax IDs are required
Ally6770
Ally6770   |     |   1,968 posts since 2010
All estates are required to have their own tax ID and everything has to be run through that account. 
Ally6770
Ally6770   |     |   1,968 posts since 2010
I was replying to the Howardt55 post about the Tax ID number which is require for an estate and not to the original post. It is posted under his response, not the original poster. 
RickZ
RickZ   |     |   19 posts since 2010
I'm not sure why, but many here seem to missing the point that this is a joint account with a surviving spouse.  The surviving spouse can take over full ownership of the account simply by presenting the deceased owner's death certificate to the bank and filling out some paperwork.  There is no need to bring the estate (or trust) into the matter. 
Ally6770
Ally6770   |     |   1,968 posts since 2010
Try this---If you have to file a complaint. They are very responsive and will rectify problems. I have used them in the past. 
http://www.mycreditunion.gov/consumer-assistance-center/Pages/contact-us.aspx