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What Happens to an Account when a Loved One Passes?

Peaceful riverbank at sunset
11.05.20
By: American Heritage

Beyond the emotional toll of the loss of a loved one is a list of responsibilities. While paperwork and documentation may be the last thing on your mind, it is important to settle certain matters quickly, such as managing the deceased’s bank accounts.

At American Heritage, we strive to treat this sensitive topic with the respect it deserves by making the process smooth and uncomplicated. For the purposes of this article, the information provided will be written with American Heritage accounts in mind.

 

Let the Financial Institution Know about Your Loved One’s Passing

The first step in settling these matters is to promptly contact each institution that manages your loved one’s accounts. They will flag the account accordingly to prevent future unauthorized access and continue reporting to the IRS until the account is closed.

Each institution may have their own policy for decedent accounts, but the general process should be the same for both banks and credit unions.

For accounts at American Heritage, please contact us via one of the following methods:

  • By phone: Call us at 800-342-0008 or 215-969-0777
  • In person: Visit one of our branch locations 
  • By fax or email: Send a written notice to 215-969-1246 or membership@amhfcu.org, include the following information: member’s name, date of birth, SSN or account number, and date of death along with your name and contact information
  • By mail: Mail a written notice with the member’s name, date of birth, and date of death along with your contact information to the following address.
    American Heritage Credit Union
    Attn: Account Services Department
    2060 Red Lion Rd
    Philadelphia, PA 19115

American Heritage may receive notification of a member’s death from the Social Security Administration, PA Department of Revenue, Department of Veteran’s Affairs, published obituary, or other sources.  In this case, we will contact the family or other account owners via mail approximately 2 business days from the date the notice is received or 30 days from the date of death, whichever is later.

 

Gather the Appropriate Paperwork

You will need paperwork from a variety of sources, including state taxation websites or county courthouses. The paperwork required also varies from state to state, but a general idea of what documents are needed are as follows:

  • Death Certificate (required for all account types)
  • Short Certificate
  • Paid in full funeral bill or completed Funeral Home Affidavit (Pennsylvania)
  • Family Member Affidavit (Pennsylvania)
  • L-8 Form (New Jersey)
  • O-81 Form (New Jersey)
  • 0-1 (IT-R) Form (New Jersey)
  • American Heritage Information Sheet (required for single owner accounts)
  • Member Services Request Form (required for Joint owned accounts to either close or remove the deceased joint owner, account ownership will determine if account is closed or owner is removed)
  • Copy of valid identification for the individual settling the account.

In addition to state residency, the account type(s) and their current balance(s) will determine what documentation is needed to settle that account. Contact the Account Services Department at 215-969-0777 ext. 7000 or membership@amhfcu.org for more information.

 

Expect Some Account Activity

Even after an institution is made aware of the passing of an account's owner, not all activity on that account will instantly stop. Some routine processes will continue even after the account has been flagged, and accounts with more than one owner may be subject to different restrictions than individual accounts. 

 

  • Monthly statements will continue to be issued to the address on file. If eStatements were setup on the account and it is an individual account, the account will be unenrolled from eStatements so paper statements can be mailed.
  • American Heritage will close all credit and/or cards in the deceased owner’s name as soon as we are notified of the owner’s death to prevent any unauthorized transactions.
  • The affected companies that are automatically debiting the account will have to be notified that the member has passed away.  Advise them to stop the automatic payment since the account is being closed.
    • For accounts with only one owner, the account will be restricted to block future automatic deposits and/or payments from posting to the account. In the case of more than one account owner, the account will not be restricted, all future automatic deposits and/or payments will continue to post until directive is received from the living account owner.
  • Any outstanding checks that were signed by the owner prior to their date of death may be paid until we receive notice of death.  Once notified, all checks attempting to be cashed or deposited will be returned.  At this time, the account may be restricted from deposit activity.
  • Certificates will remain open until the account is closed.  If a Certificate is requested to be closed, penalties will not be assessed for an early withdraw.
  • Disbursement of an Individual Retirement Account (IRA) varies depending on whether a beneficiary was elected and the relationship of the beneficiary. The IRA account(s) will be closed without penalty.
    • Non-Spousal Beneficiary: an account will have to be opened by the beneficiary. The funds will be disbursed from the IRA account and coded as a Death Distribution payable to the beneficiary. This will allow for the funds to be removed from reporting under the decedent’s SSN to the IRS.
    • Spousal beneficiary: may choose to accept the funds from the decedent’s IRA as their own and deposit them directly into their own IRA account or a Beneficiary IRA account can be established for the spouse. Please seek guidance from a tax expert or accountant before proceeding.
    • No Beneficiary: the balance of the account will be payable to the estate of the deceased owner.
  • All loans are evaluated to determine if there is credit life coverage on the balance of the loan for the deceased owner.  If there is insurance on the loan a claim is submitted by American Heritage to determine the amount of coverage and process the claim.  If there is no insurance coverage, the loan is evaluated according to the loan type to determine next steps.
    • If the deceased was the primary cardholder, the credit card account will be closed. If the credit card account was held jointly, the loan will be evaluated upon settling the account by the loan department to determine next steps. If the deceased was the joint cardholder, the credit card account will remain open and the deceased owner will be removed from the account.
    • If the loan is jointly owned, the loan will have to be evaluated to see if the joint owner qualifies for the loan on their own. Once this is determined if the joint owner does not qualify the loan will be reviewed by the loan department to determine the next steps. If the loan was only in the deceased owner’s name, American Heritage has the Right of Offset which means that the loan will be satisfied prior to paying out any additional funds.

 

Know We're Here for You

We know this process is never easy or pleasant and can be an extra stress in an already emotional time. We urge you to contact us if you have any questions at all. For more information about any of the topics discussed on this page, as well as other related matters, please visit our self-serve page.