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Home >> Special Situations >> Deceased Individuals
Bank Reopens Account of Deceased - Legal?
I was on an account with my mother, who passed away. A few days later, I closed the account and withdrew what was left in it. It stayed this way for several months, and then all of sudden I received a statement that showed that the account had been opened again, and her SS check was returned, putting the account in the negative. Can a bank reopen an account in someone's name without approval and send money back after the account was closed?
I never received a letter requesting that my mother's social security check be sent back, but evidently the bank did. I don't have that money to return, because it was used towards her funeral. She had no life insurance and no other money to pay for the funeral. Social Security was all she got. I would not think it would be legal to re-open the account with my name on it, since I closed it several months prior.
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 There is no payment entitlement for Social Security recipients for the month in which they die, and it often happens that the Social Security Administration is unable to block that payment in time, so it is received early in the next month. That payment, if credited to the late recipient's account, will be reclaimed by the Treasury if it is not returned by the bank. There are some limitations on what the bank must return, but that one extra payment always has to go back.
After the account had been closed for several months, we don't believe the bank should have fabricated a reopening of it, unless it had a contractual right to do so, simply to recover those funds. Instead, the bank ought to have contacted you and made arrangements for you to pay the funds back. The long and short of the story, however, is that you owe the bank the money and will have to return it, so contact the bank to make arrangements to do so.
Published on BankingQuestions.com 4/23/10
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