Deceased Member: POD Designation, Joint Account, and a Pension Deposit That Keeps Arriving
Gloria Ramos, a member for 19 years, died on March 3. The credit union learned of the death on March 4, when her daughter Alicia called. Gloria's accounts are a share draft titled 'Gloria Ramos POD Alicia Ramos' holding $22,400; a joint share draft with her son Daniel holding $3,100; and an unsecured personal loan with a $6,800 balance that is 12 days past due. A pension ACH of $1,150 posted on March 5 and is scheduled again for April 5. On March 10, Alicia arrives with a durable power of attorney Gloria signed in 2019, a death certificate, and a $9,700 funeral home invoice, and asks to withdraw the POD money and pay off her mother's loan. Daniel asks separately whether the credit union will simply take the $6,800 out of the joint account. No estate has been opened, and the branch has never handled a deceased member with a POD designation before.
1. Who is entitled to which funds, and what effect does the 2019 power of attorney have now?
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The power of attorney is dead on arrival: an agent's authority ends at the principal's death, so Alicia cannot use it to withdraw anything, change a beneficiary, or bind the estate. It is relevant only as evidence of Gloria's earlier intent, not as authority. The POD account passes by contract to Alicia when the credit union verifies death, outside probate, unless the account agreement contains a lien clause the credit union chooses to exercise for Gloria's own debt. That choice is discretionary and should be documented, disclosed to Alicia, and reviewed by a supervisor rather than made at the teller line. The joint account is different: the right of survivorship vests the balance in Daniel on death. The credit union should remove Gloria's name after reviewing the death certificate but should not freeze Daniel's access, and should not pay Gloria's personal loan from his funds without his written authorization, because those funds are no longer hers. Doing so invites a conversion claim that will cost more than the $6,800 loan.
2. The $1,150 pension credit posted March 5, after the credit union was notified, and another is scheduled for April 5. What should have happened, and what do you do now?
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Once a credit union has notice of death, it should flag the account so post-death recurring credits are not made available to anyone. The March 5 posting should have been returned rather than posted to an open share draft, and the April 5 item must be returned when it arrives, using the appropriate Nacha return code for a deceased account holder, with the reason noted on the account. Now: (1) place the funds already received in a suspense or estate holding account, do not disburse them, and do not let a debit card or ACH debit reach them; (2) contact the pension payer to confirm its own recovery process and document the call; (3) if the funds were already withdrawn, treat the account as short and pursue recovery from the person who received them, with legal review, because the credit union may bear the loss; (4) issue a written indemnity agreement to the payer only if the credit union's policy and counsel support it. Record the notification date, the posting dates, and each action in the account file, because the timeline is what regulators and the payer will examine.
3. How should the branch respond to Alicia's request to apply the POD funds to her mother's loan, and to the funeral home invoice?
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Separate the two requests. Alicia is the beneficiary of the $22,400, and she may direct her own money where she wishes, including paying her mother's loan. But the credit union should not present that as a condition of releasing her funds, and it must not silently net the loan against the POD balance. Check the account agreement for a lien or setoff clause, then explain plainly: the balance is hers on verification of death, and the loan is a separate obligation of the estate that she may pay voluntarily. Get her written direction if she chooses to pay. The funeral invoice is not an instrument the credit union can honor. The funeral home is a creditor of the estate, and no estate has been opened, so the credit union has no authority to disburse a decedent's funds to a third-party creditor absent letters of administration or a valid small estate affidavit under state law. Explain the small estate process, offer a written summary of the account balances for the affidavit, and do not accept the invoice as authorization for anything.