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Home >> Special Situations >> Deceased Individuals
POD and POA Mixup
My mother was the POA for my grandmother's estate. My grandmother had a CD for which my uncle was designated POD and my mother, POA. My mother closed out the CD and put $40K in a checking account, to help pay for my grandmother's bills. This was done innocently enough. She took the remaining funds from that CD and put them in another CD. The bank failed to ask my mother if my uncle was still supposed to be POD. He was not listed as POD on the new CD. My grandmother passed away and now there is a situation. The bank says they cannot put my uncle back on the account as a POD, so what we're wondering is if a POA can essentially remove a POD or if the bank should be doing something here to rectify a mistake. As a result, the estate is worth a lot more money than it should have been worth, and the estate fees will be higher. I guess my next question is whether there is recourse against the bank?
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 It doesn't seem that the bank acted improperly. As attorney in fact for your grandmother, you mother closed out a CD account that had a POD designation. The POD designation goes with the account and any automatic renewals. That's a routine transaction, and the bank had no responsibility for following up to see if the proceeds of the CD should be designated as payable on your grandmother's death to your uncle, since the new CD was arguably not a renewal of the first. In fact, there is a very strong argument that your mother could not, as attorney in fact on behalf of your grandmother, designate the new CD account as a POD account.
The bank also has no responsibility to know how the account transactions might affect your grandmother's estate fees, so it doesn't seem that there is a claim against the bank. There may be peculiarities of state law that call for a different result, however, so you should check with an attorney.
Published on BankingQuestions.com 7/30/09
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