My mother-in-law recently passed away. She and her daughter had a jointchecking account. My mother-in-law also had a line of credit account in her name only, at the same bank. After her death, the bank said the line of credit account would go away. We just found out that the bank is holding the remainder of the funds in their joint checking account to pay towards the line of credit. The money left in the checking account belongs to my sister-in-law. We would like to know if it is legal for the bank to withdraw the funds from the joint checking account, which isn't enough to pay the line of credit off, to pay towards the line of credit that is in my mother-in-laws name only.
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To determine whether the bank has the right to grab those funds, you'd need to review the loan agreement and any collateral pledge that your mother-in-law may have signed. State law may also affect the bank's ability to tie up the money.
Your sister-in-law should ask the bank to document its right to withhold those funds from her. If the bank's response is not satisfactory, she may have to contact an attorney. It's possible that the bank's actions are an unauthorized self-help attempt, but your sister-in-law may need an attorney's help to determine that and to convince the bank to back down.
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To determine whether the bank has the right to grab those funds, you'd need to review the loan agreement and any collateral pledge that your mother-in-law may have signed. State law may also affect the bank's ability to tie up the money.