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Home >> Special Situations >> Deceased Individuals
A CD 'In Trust For'
What responsibility does a NJ bank have to assure that the proceeds of a CD purchased "in trust for" are distributed to the named beneficiary, rather than to a surviving spouse/executor? Must a CD always be presented for payment, or could payment be made without surrender?
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 Some CD accounts are now opened in a book entry format. In other words, no actual certificate is issued. Instead, a receipt and copy of a deposit contract are provided. In these cases, and in many others, surrender of an actual certificate is not required.
If an account is established in trust for a named beneficiary, with the understanding that the funds will be owned by the beneficiary on the owner's death, the laws of the state will determine who has rights to the account on the owner's death. A payment of those funds to the decedent's estate, the surviving spouse or anyone else other than the named beneficiary would be a wrongful payment, unless the account owner revoked the beneficiary designation before dying or the beneficiary waived any right to the funds.
If you believe that you were named beneficiary on such an account and were wrongfully denied access to it, you should contact an attorney.
Published on BankingQuestions.com 1/30/09
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