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Home >> Scams/Fraud
Bank Pays Forged Check on Deceased's Account
Several weeks after a depositor's death, a bank paid twelve checks on the deceased depositor's account. The depositor's signature on the checks had been forged. The estate sued the bank, and the bank sued the estate's attorneys. The estate attorney advised the bank of the depositor's death. Three weeks before the bank paid any of the forged checks, the attorney's gave the bank a copy of the death certificate and a court order to examine his deposit box. Of the parties mentioned, is anyone liable?
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 This is a classic case of "what did you know, and when did you know it?" If it can be established that the bank knew of its depositor's death on a specific date, the bank is at that time on notice that it cannot pay checks on the decedent's account more than ten days after the date of death, according to section 4-405 of the Uniform Commercial Code (or UCC, which is not uniform and can be adopted with different wording in your state, so please check your state's version).
You've said that someone at the bank was put on notice of the depositor's death three weeks before any of the forged checks were paid. Knowledge by one individual at the bank is knowledge by the bank itself. Given those facts, we'd say the bank may be liable to the estate of the deceased for the amounts of those checks, assuming none of them were used to pay obligations of the estate.
Published on BankingQuestions.com 10/13/10
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