Bank account theft prior to probate.

[Richard 545]

My brother died in Oregon. At his death, his Credit Union was notified and his checking and savings accounts were frozen by letter with copy of will designating me as Personal Representative and a copy of the death certificate. When a letter of testimentary was secured from the court, it was found that the Credit union emptied his accounts and payed down a credit card bill he had with this same Credit Union. They paid themselves with estate funds after freezing the accounts and before filing anything with the court or the Execuitor. Is this legal? What can be done about this?

 

[LdiJ]

My brother died in Oregon. At his death, his Credit Union was notified and his checking and savings accounts were frozen by letter with copy of will designating me as Personal Representative and a copy of the death certificate. When a letter of testimentary was secured from the court, it was found that the Credit union emptied his accounts and payed down a credit card bill he had with this same Credit Union. They paid themselves with estate funds after freezing the accounts and before filing anything with the court or the Execuitor. Is this legal? What can be done about this?

Unfortunately, it probably is legal. Credit Unions appear to have the authority to tap other accounts to recover money owed to them.

 

[Richard 545]

So what you are saying is that a Credit union can take money out of an account, after the account holder dies, knowing that the account holder died, accept the freeze on account letter thereby making sure that the OTHER creditors do not get any money, pay themselves out of estate funds, thereby depriving other creditors or anyone else in the heirarchy of payments above them, and then get in line for more money at the creditor payout level? Is that how it works?

 

[Zigner]

So what you are saying is that a Credit union can take money out of an account, after the account holder dies, knowing that the account holder died, accept the freeze on account letter thereby making sure that the OTHER creditors do not get any money, pay themselves out of estate funds, thereby depriving other creditors or anyone else in the heirarchy of payments above them, and then get in line for more money at the creditor payout level? Is that how it works?

It's in the account agreement. It's called a right of setoff.

 

[HRZ]

THe right of set off is in there but if the CCs are not yet delinquent I'm not so sure the CU can unilaterally exercise an offset. There may be guidance on point in the regs for federally chartered CUs if this is such a CU ...they may differ a bit from bank regs . Its a point beyond my skills .

 

[Zigner]

THe right of set off is in there but if the CCs are not yet delinquent I'm not so sure the CU can unilaterally exercise an offset. There may be guidance on point in the regs for federally chartered CUs if this is such a CU ...they may differ a bit from bank regs . Its a point beyond my skills .

Again, it's in the account agreement.

 

[adjusterjack]

THe right of set off is in there but if the CCs are not yet delinquent I'm not so sure the CU can unilaterally exercise an offset.

It's possible that a due date passed and the account went into default by the time the OP got his court papers.

 

[Zigner]

Google the phrase "Right of Setoff" (including the quotes) and then come back to apologize for your error.

 

[Zigner]

In case you can't be bothered, here's what the US DOJ has to say on the matter (just one example): https://www.justice.gov/usam/civil-resource-manual-65-setoff-and-recoupment-bankruptcy

 

[HRZ]

Detals matter and we don't know what is in the CU agreement . CC s are a bit of an exception and the executor may need to look for default on death language in the CU agreement . And as a practical matter the costs and skills necessary to sort it out may not warrant the adventure even if one is correct that it was improper
It is likely that the CU has the specific language to allow for set off at death..but read iyour specific agreement . .

 

[Richard 545]

This sets up an interesting conundrum. My brother is dead. The Credit union knows this. I as a Presonal Representative for his estate, freezes the accounts at this credit union because as far as I can determine at the time of his death, many debts were paid by automatic deduction from his accounts and from automatic debit to his credit cards. However, I do not know who is being paid because the payments are being made to a payment company who will not tell me who is being paid.

The Credit union knows that I have frozen the accounts. However, they also know that according to the credit card agreement, my brother pays the payments for the credit card by direct withdrawl from his credit union account. They then have a vested interest in NOT paying themselves long enough to implement set-off for everything in his accounts. There was more than enough money in his accounts to cover the credit card payments to the credit union for a couple of years at least. The credit card agreement controls in this instance in that the agreement made by him before his death with the credit union who holds his accounts calls for and authorizes direct withdrawl from his accounts for payment. For the credit union to stop their own payments for a credit card debt from their own institution sets up a conflict of interest in withholding payments already authorized in knowing that by the right of set-off, they could get everything.

Then we have the despute of the amount owed. If they are charging interest on an unpaid balance in which they are the reason the debt is in arrears, there would automatically be a despute of amount owed.
Under Sect 169 (1026.12(d) RegulationZ of the Truth in Lending Act, for set-off to be allowed on credit card balances, BOTH the payments must be allowed to be taken directly from the account of the borrower AND there must NOT be a despute of the amount owed, or how it was acquired.

Not only did the Credit union establish the despute by not honoring their own lending agreement with my brother over the wishes of his PR, they were addressing all corrospendence to a dead guy, and they were establishing a set up where instead of making the payments to the credit card as established, and then sharing in a % of the creditors allowances at the end of the payment schedule set up under ORS115.125, they created a scheme where they knowingly withheld payments to all other creditors including themselves knowing thagt they were allowed to initiate set-off on a larger sum, they got about 3 times what the payments would have provided them should they have simply followed the terms of the lending agreement, and then also get their % of the estate authorized under 115.125. However, because they created the despute by adding finance charges to the balance because they failed to make payments to themselves based on the original agreement signed by my brother, the right to set-off specifically does NOT apply under Sect 169 of the Truth in Lending Act. They created the despute, and they violated the terms of their own lending agreement in order to initiate the set-off which makes Sect 169 controlling. Because this is a credit card issue, Set-off would appear to not apply and would specifically be prohibited. Anybody want to take a crack at this one?
BTW, I am NOT the Executor, I was only the PR under the will.

 

[Zigner]

It's possible that the CC balance became due upon his death.

Also, "executor" and "personal representative" are synonymous.

 

[adjusterjack]

I as a Presonal Representative for his estate, freezes the accounts at this credit union

Here's the problem.

At his death, his Credit Union was notified and his checking and savings accounts were frozen by letter with copy of will designating me as Personal Representative and a copy of the death certificate. When a letter of testimentary was secured from the court, it was found that the Credit union emptied his accounts and payed down a credit card bill he had with this same Credit Union.

You had no authority to do anything with those accounts UNTIL you obtained letters testamentary from the court. Until then, the CU was within its rights to ignore your letter that purported to freeze the accounts.

Whether the CU actually messed up with the right of set off is something that cannot be discerned by the details you have provided. So, unless the estate is willing and able to sue the CU, you probably have nowhere to go with this and will have to make appropriate adjustments in the estates finances.

 

[Richard 545]

Zigner, I do not quite understand what you mean by, "In case you cant be bothered", and why would I be concerned about DOJ writings concerning Bankrupcies (sic) and for HRZ, thank you for your thoughtful and cogent reply. If there is a set-off @ death provision, it certainly would not take 6 months to initiate it, in that they would be taking a great gamble that an Executor would be assigned by the court and the account funds could be immediately withdrawn for placement into an estate account at another institution. They would not assess interest in order to put the account into arrears where in they could initiate a set-off if there was a SOAT clause. They would simply initiate the action. They would have no need to freeze the accounts to other creditors, (which they did several times), if they knew that they could initiate the action immediately and not have to freeze an account with zero balance. In Jan, I contacted the credit union concerning a payment they mistakenly paid to a creditor after the freeze letter and they redeposited the amount back into the account. I have those records and the correspondence from them concerning this action; but none for the arrears of the credit card account.

BTW, I am getting replies while I am implementing my 2 finger typing techniques. Sorry if I am asking a question already answered while my fingers are being burned to the knuckles.

 

[Zigner]

Zigner, I do not quite understand what you mean by, "In case you cant be bothered"

It wasn't a reply to you - it was a reply to another poster who attempted to correct me on my wording. I didn't (and don't) expect him to bother apologizing or even checking.

... and why would I be concerned about DOJ writings concerning Bankrupcies (sic)

I didn't type bankrupcies, and I was posting to show that even the US Government considers my wording to be correct.