CD POD Beneficiary Learns Of CD 10 Years After Death Of Owner

Ken Tumin | May 8, 2011 | 5,897 posts since 2009

The reader gleebeck had posted the following comment. I've moved this post to its own thread.

SAFE DEPOSIT box opened after 10 years, found $5K CD maturing in '96, payable on death(CD purchaser deceased now about 10 years), automatically renewing. Bank is OCC regulated but recent change in ownership. Upon presentation, representative says they will have to "write" to former bank, issuer of CD.
Comments? I think the CD is payable(I am recipient, "payable on death," along with interest since maturity.

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Answers

me1004 | May 9, 2011 | 556 posts since 2010

This is actually a serious problem with the PODs that should be addressed. The banks holding the CDs apparently have no obligation to notify the POD even if the bank learns of the account holder's death. Thus, the PODs might never get the money -- because, for any number of reasons, they might never have been let know by the account holder that they are the designees! I've never even had a bank wanting to know how to get in touch with the POD if I should die, and if I offer the info, they won't take it.

If the bank does not know of the death, the account in time would go dormant and have to be turned over to the state -- after the bank, of course, has spent some time taking out dormancy fees. But the states do nothing to find and notify anyone other than to put the account on a list that no one ever knows to look at. After a certain time on that list, the state claims the money as its own. The POD is completely cut out!

PODs are not necessarily informed that they are designated as such. I do not tell mine, and do not want them to know -- for various reasons. For one, I don't want them slacking off in life and character because they think they don't have to because they have money coming their way. I also might want to change who I designate, and don't want bad feelings from those who I take off as POD. Other people might have any number of other reasons. (To be honest, my documents at home, which would be found after my death, would serve to inform of my PODs and my accounts. But not everyone is as organized as I am. Besides, if I were to die in a fire at my house, all my documents might be burned with me -- and the bank would never contact anyone.)

Ken Tumin | May 9, 2011 | 5,897 posts since 2009

Hopefully, the bank will eventually pay out the CD to you. Please keep us posted on how it goes.

Another complication that will need to be considered is the tax consequence of the interest from this CD. It sounds like no one was paying the tax on the interest that was accruing since the owner's death.

me1004 | May 9, 2011 | 556 posts since 2010

To the OP: After that long, I certainly expect the bank long ago was required to declare the account dormant and hand it over to the state. Different states might be different, but normally the state then puts it on a list for a period of time. If it is not claimed in that time, the state takes ownership of it.

Once the state takes it, I don't know if you could get it back. But these are generalities, so maybe you could get it anyway, especially if you could show no one had any knowledge of it, as you have stated.