I’m administrator of my sister’s estate. Her bank won’t tell me the names of her beneficiaries. Is that legal?
Quentin Fottrell
5 min read
“How would I know if she left a gift to a friend or shirttail relative?” (Photo subject is a model.) - Getty/iStockphoto
Dear Quentin,
My younger sister and I have been appointed as co-administrators of our older sister’s estate. I have the legal documents and certificate of death in my possession and have taken them to the brokerage, bank and credit union where our sister did business.
These entities are refusing to give me information about beneficiaries. They claim they are not allowed to share this information or the account balance information and say that they will not notify the beneficiaries. They told me that the beneficiaries know who they are.
They also told me that the beneficiary or beneficiaries have to show up in person at a branch to claim the funds. How would I know if my sister left a gift to a friend or shirttail relative? Have any of your other readers run into this problem?
Frustrated Administrator
If the beneficiaries named on the account are not the same as those named in the will, the former trumps the latter. - MarketWatch illustration
Dear Administrator,
After an account holder dies, their financial institution should contact the beneficiary or beneficiaries listed on an account — at least in theory, but legal experts say it can be more complicated than that.
But don’t assume financial skullduggery where none may exist. What’s more, all accounts with named beneficiaries — from life-insurance to banks and assets with transfer-on-death deeds — are outside of probate and, therefore, also beyond your scope as administrator.
“The bank generally does not have an obligation to notify a beneficiary of their designation as such on a bank account unless certain conditions are met,” says Russel Morgan, founding member of the Morgan Legal Group, which has offices in New York.
As administrator or executor of your sister’s estate, you have a duty to notify the beneficiaries named in her will. If you have letters testamentary or letters of administration to establish your authority to act on behalf of the estate, the bank may be required to release information regarding the accounts, including the identity of any beneficiaries, he adds.
“If someone is named as a beneficiary of a bank account — for example, as a payable-on-death beneficiary — the bank is typically not required to proactively contact that person about the designation while the account holder is still alive,” he adds. “The bank’s responsibility is generally limited to following the instructions laid out by the account holder, including the transfer of funds to the named beneficiary upon the account holder’s death.”
In practice, a person would usually learn of their status as a beneficiary only after the account holder’s death, either through the estate’s executor or an attorney handling the estate, or by directly contacting the bank, he adds. “The bank is then responsible for releasing the funds to the beneficiary upon the presentation of the necessary documentation, such as a death certificate and identification,” he says.
Matters of privacy
There are gray areas. If the bank has reason to believe someone is unaware they are a beneficiary, if the beneficiary is a minor or otherwise has no knowledge of the account, the bank could choose to take steps to ensure that the beneficiary is aware of their rights, although this is not a statutory requirement, Morgan says. “The bank is bound by privacy rules, and disclosing the beneficiary’s identity could violate those rules unless the proper documentation or request is made,” he adds.
Typically, when someone dies, their next of kin or their estate administrator or executor contacts their financial institution and provides the deceased person’s name and Social Security number, along with a death certificate. If the beneficiaries named on an account are not the same as those named in the will, the former trumps the latter. Brokerage firms, credit unions and banks all have a duty of care to safeguard the funds for the account owner and, in the event of their death, for the beneficiaries of the accounts.
There are exceptions to this process, however. “When a designated beneficiary on an account cannot be located or dies before the account owner, it could cause the account to have to pass through probate,” according to the Keystone Law Group. A legal dispute would also alter the terms. “There may be evidence to suggest the beneficiary unduly influenced the decedent to add them to the account, which, if successfully proven, could disqualify the beneficiary from receiving any of the funds,” it adds.
But as administrator, your ability to access information about beneficiaries could still be limited. When an account has a pay-upon-death beneficiary, “the executor and administrator generally cannot directly access its funds to pay the decedent’s debts and/or estate administration expenses,” Keystone says.
It may also be a short-lived windfall if the deceased leaves behind debts. Once you claim the deceased person’s bank account, your own creditors can access your newly acquired funds to satisfy the estate’s debts, it adds. “Likewise, you could be responsible for paying taxes.”
Being an administrator or executor is a tough job, which is why so many friends and relatives might understandably not want to do it.
