Can a bank refuse to cash CD to after account holder passes?

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Can a bank refuse to cash CD to after account holder passes?

Grandmother passed away and had a CD. It had 3 beneficiaries –  daughter (deceased), granddaughter, and grandson. Bank has stated that since the daughter is deceased they can’t/won’t release the funds to the other beneficiaries. They state that they will require a court order to release the funds and then only to the estate.

Asked on August 6, 2010 under Estate Planning, South Carolina

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I am so sorry for your loss.  Do you mean that the CD had a properly executed "payable on death" (POD) beneficiary form that lists you three as the "primary" beneficiaries? Or are you and the remaining beneficiary "contingent" beneficiaries?  How the  POD is written matters here.  Generally, if the POD is valid then the money passes automatcally and "outside" of probate, meaning NOT to the estate.  The whole point of a POD is to lower estate taxation and the need for probate.  I would ask the bank for a reason - in writing - as to why they will not release the funds. Do they mean that the funds are to be paid to the daughter's estate?  Get legal help.  But get answers from the bank first.  Good luck.


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