Thursday, April 18, 2024

April 2017 Legal Briefs

  • Deceased Customer Accounts
  • Oklahoma Interstate Succession Laws Chart

Deceased Customer Accounts

By Mary Beth Guard

Your depositor dies.  Now what?  It depends on what the facts and circumstances are.
If the customer’s funds are held in joint tenancy with right of survivorship, ownership passes to the surviving joint tenant(s) with no need for court action or any special procedure.  If it is an interest-bearing account and the deceased individual’s SSN was used as the TIN for IRS reporting purposes, the bank will need to restyle the account on its system to use a surviving tenant’s name and SSN.  The deceased individual is no longer a joint owner.  No items payable to the deceased individual (whether direct deposit or check) can be accepted into the account after death because the dead person is no longer a joint owner.  The dead person’s ownership interest was extinguished by death.
If the customer had an account on which he had named payable on death beneficiaries, the beneficiary(ies) would be entitled to the funds on deposit as of the date of death and after-death deposits to the account should not be allowed.  The funds sit there until claimed by beneficiaries.  No court action is necessary.  The transfer of ownership occurs by virtue of the contractual pay-on-death designation and the operation of Section 901 of Title 6 of the Oklahoma Statutes.
What if the customer dies and his funds were in his sole name in individual accounts (and we’re using the term “accounts” in the broadest sense, to include CDs) with no POD beneficiary and no Totten Trust?   There could be at least four possible outcomes.
1. No one shows up to make a claim on the funds.  Years pass by and they are ultimately reported and remitted to the State Treasurer’s office as presumed abandoned property under the unclaimed property statutes.
2. A court of competent jurisdiction appoints a personal representative for the estate of your deceased customer.  The personal representative assumes responsibility for the funds as an asset of the estate and transfers the funds to an estate account with a proper EIN for the estate.  Disbursements are made by the personal rep under the watchful eye of the court.  There may or may not be a will involved.  In some instances, a special administrator (who may be, for example, a creditor to whom the estate owes money) is appointed.
3. The customer dies without a will, there is $20,000 or less, in the aggregate, in sole ownership accounts of the decedent in your bank with no POD or Totten trust beneficiary and the heirs present the bank with an affidavit of heirship under Section 906 of the Banking Code in an effort to try to obtain the funds without having to go through a court.
4. The customer dies and, rather than going through a court to do an estate proceeding, a successor of the decedent uses a procedure in Section 393 of Title 58 of the Oklahoma Statutes to make a claim for the funds.
Your bank will undoubtedly experience each of these four scenarios.  The first two are quite straightforward.  Because of the complexity of the relevant statutes, it is scenarios 3 and 4 above that generate the most questions and challenges, such as the following:
Can the Section 906 procedure be used to claim funds deposited after death?  No.
Can the Section 393 procedure be used to claim funds deposited after death?  Yes.
Can Section 393 be used in instances where the conditions in Section 906 can’t be satisfied (and vice versa)?  Yes.  Section 906 can only be used if the decedent didn’t leave a will and if the total amount of funds in sole ownership accounts of the decedent total $20,000 or less in your bank.   The customer could have similar amounts in multiple banks.  There is no overall cap.  Let’s say the customer has $20,000 in accounts in 100 different banks in Oklahoma.  The heirs could make Section 906 claims in all the banks, walking away with $2 million without having to go to court.  Section 393 doesn’t focus just on the amount of sole ownership funds in a single financial institution.  Instead, it looks at the net fair market value of the Oklahoma property that would be part of the decedent’s estate.  (That does not include property whose ownership transfers upon death.)  If the net fair market value is $50,000 or less, an application or petition for an estate proceeding is not pending or has not been granted, taxes and debts of the estate have either been paid or are barred by limitations, a successor of the decedent can present an affidavit indicating entitlement to the funds.  If the only asset of the estate happens to be deposit accounts at a bank, if the total is $50,000 or less and the other conditions of the statute are complied with, Section 393 could allow you to pay out the entire $50,000 – even if the decedent left a will, even if some of the funds came into the account after the customer’s death.
Section 906 is permissive, not mandatory.  Section 393 is mandatory.  Sec. 394 of Title 58 establishes the bank has no duty to inquire regarding the facts in the 393 affidavit, and that unless the bank knows statements made in Affidavit 393 are false, the bank must make the distribution or be liable for costs of the affiants in obtaining the funds.
There are so many subtle nuances in the two statutes that conferring with your counsel will often be necessary, but you need to have a basic understanding of how the laws work.
The intestate succession chart sketches out who would be considered the heirs of a decedent.  Note that in that chart the term “issue” means the lineal descendent of a deceased person such as children, natural or adopted by the deceased, but not step-children..
We also have two flow charts courtesy of  Katrhyn Ivey, general counsel of  Shamrock Bank which will aid you in determining whether either Section 906 or Section 393 may be used to release funds. You can find the flow charts here. Thanks, Kathryn!
OKLAHOMA INTESTATE SUCCESSION LAWS
(Who is entitled to inherit in the event an individual dies without a will)
 
FAMILY CONFIGURATION
OUTCOME
Spouse Only
Spouse gets the entire estate
Spouse and Parent(s)
Only
Spouse gets all property acquired by joint industry of the husband and wife during coverture, plus an undivided 1/3 interest in the remaining estate.
If only 1 Parent, the Parent receives an undivided 2/3 interest in the remaining estate.
If both Parents living, each Parent receives an undivided ½ of the undivided 2/3 interest in the remaining estate. (und. Equal shares)
Spouse and Sibling(s)/Issue of Parents
Only
Spouse gets all property acquired by the joint industry of the husband and wife during coverture, plus an undivided 1/3 interest in the remaining estate.
If only 1 Sibling, the Sibling receives an undivided 2/3 interest in the remaining estate.
If multiple Siblings, each Sibling receives an undivided equal share of the undivided 2/3 interest in the remaining estate.
If there is a deceased Sibling with issue, the issue of the deceased Sibling receive an und. Equal share of the deceased Sibling’s equal share.
Spouse and Issue of said Spouse
Only
Spouse gets an und. ½ int. in all the property of the estate.
If only child, said child receives an und. ½ int. in all the property of the estate.
If multiple children, each issue receives an und. Equal share of the und. ½ int. in all the property of the estate.
If there is a deceased child with issue, the issue of the deceased child receives an und. Equal share of the deceased child’s equal share.
Spouse and Issue one or more of whom are not of said Spouse
Only
Spouse gets an und. ½ int. in the property acquired by the joint industry of the husband and wife during coverture, plus an und. Equal part in the property (with each living child and lawful issue of deceased child) not acquired by the joint industry of the H/W during coverture.
If only child, said child receives an und. ½ int. in all the property of the estate.
If multiple children, each issue receives an und. Equal share of the und. ½ int. in all the property of the estate.
If there is a deceased child with issue, the issue of the deceased child receives an und. Equal share of the deceased child’s equal share.
Issue Only
Children get und. Equal shares of the entire estate.
If there is a deceased child with issue of their own, the issue of the deceased child receive the deceased child’s equal share in und. Equal shares.
Parent(s) Only
If one parent, said Parent gets the entire estate.
If both parents, each Parent gets an und. Equal share of the entire estate.
Issue of Parents Only
If only one sibling, said Sibling receives the entire estate.
If more than one sibling, each receive an und. Equal share of the entire estate.
If there is a deceased Sibling with issue, the issue of the deceased Sibling receive an und. Equal share of the deceased Sibling’s equal share.
Grandparent(s) Only
Paternal GPs get an und. ½ int. in equal shares;
Maternal GPs get an und. ½ int. in equal shares.
If one Paternal and one Maternal GP, each receive an und. ½ interest.  If only Paternal side living, Paternal receive entire estate.  If only Maternal, Maternal receive entire estate.
Issue of Grandparents Only (Aunts and Uncles)
Issue of Paternal Grandparents get equal shares of the und. ½ if they are of the same degree of kinship to the decedent.
Issue of Maternal Grandparents get equal shares of the und. ½ if they are on the same degree of kinship to the decedent.
If in unequal degree, the more remote take by representation.
Next of Kin/ Cousins etc. Only
Take in equal degree
No Spouse, No Issue, No Parent, No Sibling, No Grandparent, No Issue of Grandparents, No Kindred
Entire estate escheats to the state for the support of the common schools.