On-Line Deposit Accounts
Everyone wants to make the best return on their hard-earned money and many people shop around to find the best interest rate. In our world today, we may find better rates at on-line banking sites than we can find in our brick and mortar banks. BUYER BEWARE!
In working on an estate recently, the decedent had accumulated a nice nest egg. He was diligent not to put more than the FDIC amount ($250,000) in any one banking institution. In fact, he had a few accounts with on-line banks to earn a good interest rate. The administration of the estate had progressed to a point of consolidating the accounts after receiving tax clearance and work toward the distribution of the assets. All was going well until we attempted to collect the balance of an account that was based in California.
When sending the request to close out the account, we received a response that we needed to file for an ancillary estate administration in California. (Of course they didn’t tell us this back when we communicated with them to notify them of the account owner’s passing.) This was news to me as I have worked on many estates where the decedents had accounts in banks in other states but never have I encountered this requirement for a bank account.
After much research and communications with the bank and a lengthy call with the Probate Department of Los Angeles County, I learned that it was, in fact, a requirement to raise an ancillary estate in California. Normally this requirement exists only when there is real estate in a non-domiciled state. We merely get an exemplified copy of the probate proceedings from the local Surrogate or Register of Wills, file it with the county in which the real estate is located and we are good to go.
Well, sad to say, that is not the case in California. In addition to the exemplified copy of the probate proceedings, there were several other forms required along with a fee of almost $500. Once the papers are filed, within a month we will be advised of a hearing date (three to four months out) at which the executor must be present in person or by phone. After the hearing, if there is no opposition, the court will sign an order to appoint the executor (being the same person who has been acting in New Jersey as executor). Then, and only then, will the Probate Department – in about a month after the order is signed – issue the documentation needed to present to the banking institution to receive the funds and close out the account.
Whew, what a process! So now, we will be waiting for another six months before the beneficiaries can receive this asset.
So, the BIG question is; was the higher interest rate worth this extra cost, delay and hassle?
Great information ! I would love to actually know what states do the same thing , as rarely we don’t ask where banking online headquarters really is located in what state or actually connected to a larger financia l institution in another state
I would love read a list of where each online banks have thar same requirement as does California. Online banks such as Ally bank, discover bk.,Capitol one 360, synchrony bk. If you know of these , it would inform many persons. Thank you for allowing a reply from me.
I do not have a list of states with the requirements similar to California. This is the first time I have experienced such a situation. Sorry.