By Donya Parrish, MCU VP- Risk Management
Should we require a death certificate if a member dies when there is a surviving joint owner?
It depends. For the surviving joint to transact? Generally no. As a joint owner, the surviving owner has a right to transact on the account whether the other owner is alive or not. That includes withdrawals, changes, or even closure of the account.
The credit union would certainly like to know when an owner dies so you can look at blocking access devices (like debit cards), managing outstanding loans, ACH, and membership, but those have no impact on the joint owner’s ability to transact as an owner. For loans and other processes, if your practice is to require a death certificate, go ahead and request it; just don’t limit the joint owner continuing to transact without it.
A good practice might be to flag the account if you learn of a death, review how the account is accessed, and allow the joint to continue transacting. You can also set a timeframe for the surviving joint account owner to establish membership if they were not the member on the account. Your credit union can have a policy on the time until you require it, but keep in mind the first-named owner (generally the one tied to the membership) is the tax ID number that reports to the IRS. It can only be changed if a new membership is established.
If the surviving joint owner doesn’t qualify for membership, your credit union can require the account be closed. It is typically only by giving that individual appropriate time to move any deposits or payments, so check your policy.