Bankers Take Action Before August 1, 2018: Prepare for Two Deposit Account Changes

The LBA passed two pieces of legislation during the regular legislative session this year that take effect on August 1, 2018. Bankers need to update their forms and procedures and share this information with those bankers who interact with deposit customers so that they will be prepared. Here is an overview of the two legislative changes that you need to prepare for:

(1) Surviving Spouse Access to Deposit Accounts of Deceased Spouse. Act 302 by Rep. Edmonds raised from $10,000 to $20,000 for the amount limit that a surviving spouse can withdraw from a deceased spouse’s deposit accounts without court proceedings. A surviving spouse generally has immediate expenses (such as funeral and related expenses) and this amount was increased to help enable a surviving spouse to access funds to be able to pay for expenses that arise in association with the loss of a family member. This applies to all federally insured depository institutions, which includes banks, savings banks and savings and loan associations.

Act 302 amends La. R.S. 9:1513. Click here to read Act 302.  

Section 1513 provides that a federally insured depository institution may pay to the surviving spouse of a depositor a sum not to exceed $20,000 (formerly $10,000) out of the deposits of a decedent or out of deposits of the community between the survivor and the decedent, deposited in the name of the decedent, or of the survivor, or in the name of the decedent jointly with the survivor or otherwise. This can be done without requiring any court proceedings, court orders or judgments of possession.

Remember that Section 1513 requires that the surviving spouse provide an affidavit to the financial institution attesting that the total funds withdrawn from all depositories do not exceed $20,000 (formerly $10,000). 

Action Item: Update your forms. In light of the changes made to R.S. 9:1513 by Act 302 to raise the aggregate withdrawal limit amount from $10,000 to $20,000, financial institutions should update their affidavit form to provide that the affiant attests that the total funds withdrawn from all depositories do not exceed $20,000. This may be something that your institution will need to communicate to your deposit forms provider. In addition, you may want to have your attorney review the affidavit form used by your institution to make sure that it is in compliance with amended R.S. 9:1513. 

Action Item: Training. Bankers who interact with deposit customers need to know that beginning August 1, 2018, a surviving spouse will be able to withdraw up to $20,000 from all depository accounts of the deceased spouse. 

(2) Closure of Small Deposit Accounts of Deceased Customers. Act 96 by Rep. Miller amended R.S. 6:315.1 to increase the dollar limit size for what constitutes a small deposit account from $5,000 to $20,000. Beginning on August 1, 2018, a depository financial institution will be able to close out a small dollar deposit account where the owner dies without a will and to release the funds to a surviving spouse and heirs, if any, or to the heirs, if there is no surviving spouse. This increase will allow family members to close out a deceased relative’s small deposit account and take possession of the deposits without having to open a succession and obtain a judgment of possession. This provision applies to all depository institutions, including banks, savings banks and savings and loan associations. 

Remember that Section 315.1 requires that the surviving spouse and/or heirs provide to the financial institution an affidavit establishing jurisdiction and relationship. The affidavit shall also state that the deceased depositor left no will, that the total aggregate amount on deposit subject to transfer under Section 315.1 provisions do not exceed $20,000 (formerly $5,000), and that such facts are true and correct. Once the affidavit is provided with the required affidavit, it may issue a draft in the amount that the deceased left on deposit as long as that amount does not exceed $20,000. The draft is issued payable to the surviving spouse and heirs named in the affidavit.

Act 96 amends La. R.S.6:315.1. Click here to read Act 96.  

Action Item: Update your forms. In light of the changes made to R.S. 6:315.1 by Act 96 to raise the ceiling on what qualifies as a small deposit account from $5,000 to $20,000, financial institutions should update their affidavit form to provide that the affiant attests that the total aggregate amount of funds left on deposit by the deceased customer do not exceed $20,000 (formerly $5,000). This may be something that your institution will need to communicate to your deposit forms provider. In addition, you may want to have your attorney review the affidavit form used by your institution to make sure that it is in compliance with amended R.S. 6:315.1. 

Action Item: Training. Bankers who interact with deposit customers need to know that beginning August 1, 2018, if a deposit customer dies, a surviving spouse and heirs will be able to close out the deposit accounts of deceased customer in accordance with the requirements of La. R.S. 6:315.1 as amended by Act 96, with the big change being that this procedure now applies to deposit accounts with a total aggregate balance not exceeding $20,000. The old limitation was $5,000.