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But the Will Says…

March 9, 2022 2:54 pm

By Donya Parrish, MCU VP- Risk Management

An all too common conversation on the compliance hotline starts with, “our account cards say… but the family brought in a will.” That is the point that I generally interrupt by saying, “you don’t care!” Now that might seem harsh, but it is an important distinction.

The credit union enters into a contract with members at account opening when the account card is signed. It lays out expectations for the credit union and the member as well as the terms of the account. The terms might include joint owners and/or payable on death beneficiaries. Those roles are key in estate planning because they are non-probate transfers when an owner dies.

Funds first pass to any surviving joint owners and later pass to any PODs if no other owners remain. It is a process used to ensure funds pass as the account owner intended, and also one that can be adjusted easily with an updated account card at any time. You can learn more about non-probate transfers in this MSU MontGuide.

Now back to the will that was produced.  You have no idea if it is the only copy or if it is valid, and frankly, you don’t care. Even if there are no surviving owners or PODs on an account, you need district court documentation to show the estate has been opened and who has authority (generally a personal representative) to transact for the estate. The credit union is lacking the details to decide who “should” receive or manage the funds and is best served to require district court documents before having any conversations about distributing funds.

You can learn more about Death of a Member situations in our webinar series on the Compliance Training Tools page. Unfortunately, it is a topic all credit unions have to deal with eventually.

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