TIP: We often get calls at The League about problems with old accounts, when defective documents are discovered after an accountholder passes away. Such problems or potential problems may include:
- Missing signatures of account owners;
- Failure to mark the account ownership as “and” or “or”;
- Failure to execute a separate signature card for each account (suffix);
- POD beneficiaries listed without sufficient information to positively identify or locate the beneficiary;
- Joint owners or POD beneficiaries who are ex-spouses;
- Trust accounts without paperwork naming a successor trustee;
- Organization accounts that were documented as joint ownership accounts; and
- Old account agreements that do not document the owners’ receipt and agreement to the terms of an account agreement brochure.
You may very well have identified other problems that you can add to this list.
Nearly all credit unions have had to deal with these issues. If you have found one problem, you can expect to have more of the same waiting to be discovered. Perhaps they trace back to a particular employee or branch that had adopted peculiar procedures for a while.
These documentation issues can create difficulties and risks for the credit union, member, or surviving family if not addressed before death. Some situations may need intervention by an attorney or even a court to prevent a loss, because of uncertainty over who is entitled to funds. It is much better to try to deal with these issues when the member is living, so they can resolve the problem by updating the documents.
Make a plan
When you find some of these problems, you can consider a plan to deal with others like it that remain undetected.
- One approach might be to have a staff member periodically undertake to review a set of accounts, maybe 50 or 100 at a time, to look for problems. When defective documents are found, contact the member and invite them to come in to update their documentation.
- Another approach may be to have staff, time-permitting, review signature cards when the member is at the teller window for a transaction. If they spot defects, they can take care of it then or invite the member to come back to work with a member service representative.
- A final approach could be to post a lobby sign or run a newsletter article from time to time. It can remind members of the need to review their account documentation, beneficiary designations, etc., to be sure they meet their current needs. Many members may not accurately remember their POD beneficiary designations.