Bank won't allow son to deposit a VA check payable to his mother into an account that he is on with her without her endorsement

Question

This is a very unusual situation, but I've encountered it several times with this one particular bank that my husband and his parents have a joint checking account with. We did all his parents' finances and occasionally, when they received a check instead of direct deposit, we'd put "For Deposit Only" & the account number on the back of the check to deposit it into their joint account. The bank refused to deposit it unless whoever it was made payable to endorsed it as well. They said it was because it was made out to one person and there were others on the account that could withdraw money from the account, so endorsing it acknowledged that the payee still wanted to deposit the money, knowing others could take the money out.

Excuse me, but wasn't that the purpose of all of them going in together to set up the account and sign that they knew any one of them could withdraw money or sign the checks? That was the purpose of setting up a joint account, so they all would have access. Why do they have to endorse every check every time they want to deposit it? They've already established it's ok to allow the others access. The bank says the law requires it, but no other bank does this. If that were the case, why can I deposit checks written to my husband into our joint account (at a different bank) that I just write "for deposit only & our acct. # ?" I used to work in a bank, and the only time we had to have them endorse it was if they were getting cash back.

So here's the unusual situation: My father-in-law, who received VA benefits, died in December. His wife qualified to receive his last benefit check for the month after his death. Instead of it being direct deposited into their account, she had to apply to the VA to receive it. She was going to use it for his funeral costs. But she died in February! The VA sent her a check, payable to her, in March. I asked the bank if my husband could deposit the check into their account (all 3 were still on the account) if he put for deposit only. After all, it was money that was rightly owed to her and was meant to help pay for their funerals. Her check > Her account, right? They said no, not without her endorsement.

Please tell me there's a way around this. They had no other assets, so no lawyer was used to settle their estate. My husband would have been the executor if we had. He had been their Power of Attorney, but the bank said that ended with their deaths. I hate dealing with the VA, and the local office said they aren't sure they would reissue the check to her son if she had died... even if she had been alive when she should have gotten it, and it rightly belonged in her account.

Answer 1

Why do they have to endorse every check every time they want to deposit it?

They told you why.

They said it was because it was made out to one person and there were others on the account that could withdraw money from the acct., so endorsing it acknowledged that the payee still wanted to deposit the money, knowing others could take the $ out

The reason they insist on it may have something to do with their responsibility in case of elder abuse. They are worried that you may be using your parents' money without their knowledge, and if it ends up being true and they didn't enforce the requirement - they may also be liable.

I have a joint account with my spouse, and they do not let us deposit checks written to both of us unless we both endorse. This is similar, and stems from the same concern.

So here's the unusual situation

In case of a death of a joint account holder - the whole account is frozen until the estate is executed. You cannot deposit a check of a deceased person to such an account.

Answer 2

Okay, I went through a similar situation when my mother died in March of this year. The estate still needs to go into probate. Especially if there was a will. And when you do this, your husband will be named as the executor. Then what he will need to do is produce both of their death certificates to the bank, have the account closed, and open an estate account with both of their names on it. Their debts & anything like this should be paid from this account as well. Then what you can do is endorse the check as the executor and deposit it into this account. After all debts are paid, the money can be disbursed to the beneficiaries (your husband). Basically, as long as they didn't have any huge debts to pay, he will see the money again. It just may be a couple of months. And you will have to pay some filing fees.

Answer 3

I have seen this happen with IRS checks, the bank told me that the IRS imposes the requirement. Otherwise, though, I have frequently deposited checks made out to my wife into a joint checking account without her signature, they have never cared one bit.