A father who lived in Colorado named his son, who lives out of state, as personal representative of his will. The father had a safe deposit box in Colorado, and after his death the bank insisted that the son was the only person who could access the safe deposit box, and that he must travel across the country to do so. The bank would not allow the son to authorize his sister, who lived in Colorado, to access the account. The paperwork that the bank demanded showed their ignorance of both the situation and Colorado law, and eventually the son had to hire Karen to correct the miscommunication with the bank.
This real example showcases an issue that Karen sees all too often as an estate planning attorney. Unfortunately, some bank policies don’t seem to anticipate that a bank customer may become disabled or die while there is an account or other asset at the bank.
While putting your other estate planning affairs in order, you may want to look at your accounts and consider whether they will still function the way you intended when it comes time for your heirs to access them. Some questions to ask about your bank and other accounts are below:
1. Do you have trust accounts? If I ever want to change the owner of my individual account to a living trust will I be able to keep my account number?
You may not have or need a living trust now, but if you decide to establish one later you might appreciate the opportunity to fund your bank account into your living trust without having to get a new account number or worse, having to change banks.
2. If I want to change the owner of my account to a living trust what would I need to do?
As in the example above, some banks insist that you go to them in person to change ownership. Others will send the paperwork by mail so we can fill it out in order to help the client do it correctly. If you rarely if ever go to your bank in person and would consider having to do so a hassle associated with changing your account to a living trust, keep that in mind when choosing banks.
3. If I become incapacitated, what will the agent named in my power of attorney (or successor trustee named in my trust document) have to do in order to gain access to and control over my accounts?
Although banks will tell you that their “Know Your Customer Rules” are mandated by federal law, that law actually is very flexible in how banks can verify their customer’s identity. That’s why some banks operate entirely on the Internet while others require an in-person visit for just about anything.
When talking to your bank, show them a copy of your living trust or power of attorney and ask what the person named in that document will have to do to take over your banking affairs if you become mentally incapacitated. Will your son from out-of-state have to make a special trip and appear in person? What documentation will he need? If your power of attorney or living trust requires that a disability panel find you incapacitated, will the bank insist on the affidavits of two doctors even though that’s not what your plan calls for? Will the bank even honor the power of attorney/living trust or will it insist on a court proceeding?
4. If I die owning this account, what will my personal representative (or successor trustee named in my trust document) have to do to collect my bank account?
Your questions here should be similar to those in question 2. If the bank will require that your successor trustee go through probate court to get “letters of authority” than the bank is telling you it doesn’t intent to let your estate plan work the way you want it to work. If you have a will-based plan the bank is usually right that you will require probate documents. But you should still ask how the personal representative can use those documents. Can the personal representative work with the bank long-distance?
These questions can help you decide if you need to change banks or change estate plans or both.