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The latest Q & A on a compliance issue, as provided by the League's General Counsel at Norman, Hanson & DeTroy.
Question: A person has come into the credit union with a proper Small Estate Affidavit that he has executed (the “Heir”) regarding Deceased Member. The credit union has $12,000 in funds of the Deceased Member. It intends to make a check for the funds payable to “Estate of Deceased Member.” Is that correct?
Answer: No. If the check is made payable to the Estate of Deceased Member, then only a court-appointed Personal Representative of the Estate may properly negotiate the check, i.e., he becomes the Payee. In that case the Heir cannot negotiate/indorse the check because he is not the Personal Representative (even if a Will of Deceased Member names him as PR) because no court has so appointed him. The purpose of allowing collection by affidavit under the Probate Code is to avoid the cost and administrative burden of filing probate for small estates; so by making a check payable to the Estate of Deceased Member, the credit union would be forcing the Heir to nonetheless filing for probate. The credit union instead should make the check payable to “Heir,” which will then allow the Heir to negotiate/deposit the check without having to file a probate matter.
For more compliance news, please visit League INFOSight through the Maine CU League's website.