Is depositing checks payable to deceased person bank fraud?

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Latest post 09-17-2011 1:53 PM by kath21. 3 replies.
  • 09-16-2011 8:24 PM

    • majesty
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    Is depositing checks payable to deceased person bank fraud?

    Rent checks are made payable to my father although the income properties are owned by my parents' trust. My father becomes incapacitated and his death is eminent, and my mother is incompetent, thus, by brother becomes the successor trustee.  

    Since my bother lives out of State, and my parent's joint account is now tied up in the probate estate since there is no will, my brother decides to deposit the existing rent checks payable to my father into my father's other joint account with my sister, and has her pay my parents current bills.  My bother retains a trust attorney, however, a bank account in the name of the trust is not opened. Since my brother lives out of state, my sister has all of my parents mail forwarded to her house and she manages my parent's trust income and expenses using her joint checking account with my father.  

    Two months later my father passes away.  Instead of my brother opening an account in the name of the Trust, my sister continues to deposit checks make payable to my deceased father in to her joint account (which is now solely her account due to my father's passing). This continues for  8 months.

    My brother passes away, and my other brother becomes the successor trustee and immediately opens an bank account in the name of the Trust, and retains the same trust attorney even though he knows what has been going on having received checks from my sister for various out pocket trust expenses he paid out of his own pocket, as well as allowing her to continue to make deposits and pay expenses of the trust using her account for two more months after he opens up his own trust account.  And the trust attorney fees were also paid by my sister who is also a beneficiarey of the trust.

    Isn't it bank fraud to deposit checks payable to dead person for 8 months into an account owned by my sister?  Didn't she have an obligation to inform her bank that my father had passed and was no longer a joint tenant owner on her account. How could the trust attorney allow this to happen?  

         

  • 09-17-2011 5:41 AM In reply to

    Re: Is depositing checks payable to deceased person bank fraud?

    majesty:
    Isn't it bank fraud to deposit checks payable to dead person for 8 months into an account owned by my sister? 

    Not necessarily. Fraud generally requires a false statement with an intent to obtain from another property or some benefit he is not entitled to receive. The issues would be how she deposited the checks and what she intended to do with the money. If she used the money for expenses related to the rental properties, for example, then its hard to see that as any kind of fraud. Sure, it would have been cleaner to set up the trust bank account and put the funds in there since the properties were owned by trust. But just because they didn't follow the right form does not make it fraud.

    majesty:
     Didn't she have an obligation to inform her bank that my father had passed and was no longer a joint tenant owner on her account.

    Perhaps, or it may have been up to the estate to do that. Ask your lawyer about that. As with everything else in this long ongoing saga of yours, your lawyer is the best source of advice—he/she should know all the facts and the applicable law and can help you resolve the issues you have with these trusts.

    majesty:
    How could the trust attorney allow this to happen?

    Attorneys do not control their clients. They advise them. What the clients do after they get the advice is up to them. The lawyer may not have even known the details of what was going on. And if he did, he may have advised the client it would be better that they set up the trust bank account and the client ignored the advice. Wouldn't be the first time a client has ignored a lawyer's advice, wouldn't be the last. I've had clients who ignored my advice, too.

  • 09-17-2011 12:33 PM In reply to

    • majesty
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    Re: Is depositing checks payable to deceased person bank fraud?

    Thanks for your response.  I could understand making the deposits of a my deceased father a joint account that was owned by the Trustee, but to use an account of one of the beneficiaries of the Trust?  It was my understanding that all beneficiares are to be treated equally without favortism.  

  • 09-17-2011 1:53 PM In reply to

    Re: Is depositing checks payable to deceased person bank fraud?

    majesty:
     It was my understanding that all beneficiares are to be treated equally without favortism.  

     

    Like TA said, it depends what she does with the money; if used to pay estate's bills, it surely isn't favortism.  But if she keeps it for herself, that would be a problem.  All depends on what she does with it.

    That is the reason it is best to keep things on the "up and up" with a special account for the trust, but that in itself doesn't necesarily prevent one from committing fraud.

    But somebody has to do the day-to-day business.   Hopefully, that is all she is doing.

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