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Bank taking estate funds to payoff a car loan

#1
What is the name of your state (only U.S. law)? CA

My boyfriend's elderly Father recently passed away and had a sizable balance remaining on a car loan.
My boyfriend was NOT a co-signer on this loan.
We told the the credit union right away (in writing) that we would be surrendering the vehicle and that there was no money in the estate.

Recently we went to close the checking and savings accounts to recoup funeral expenses. We were told we could not as the accounts were frozen as they would likely "offset" any potential loss on the auction sale of the auto. :mad:

Q1: How can they take these funds when my boyfriend's name is also on both accounts?
Q2: I heard that banks cannot take "offset" funds if the income source are retirement or social security (his Father's only 2 sources of income)

Any advice would be much appreciated.

Thanks,
Maggie in CA
 
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#2
It is not income. It is inheritance. Any of the estate can be used to pay off debts prior to being distributed depending. How was your boyfriend on the account? And this is really none of your business legally.
 

HRZ

Senior Member
#3
Not necessarily ...and we don't know exactly how the account was titled ...and this is BF s matter to sort out not a WE.

BUt there is are points you raise for him to,check out , Q 2 n particular

Q1 requires knowing if it was a JTWROS account and perhaps more .
 
#4
What is the name of your state (only U.S. law)? CA

My boyfriend's elderly Father recently passed away and had a sizable balance remaining on a car loan.
My boyfriend was NOT a co-signer on this loan.
We told the the credit union right away (in writing) that we would be surrendering the vehicle and that there was no money in the estate.
Then you lied. There obviously was money in the estate since the deceased had checking and savings accounts.

Recently we went to close the checking and savings accounts to recoup funeral expenses. We were told we could not as the accounts were frozen as they would likely "offset" any potential loss on the auction sale of the auto. :mad:

Q1: How can they take these funds when my boyfriend's name is also on both accounts?
Because the deceased's name was on both the accounts.

Q2: I heard that banks cannot take "offset" funds if the income source are retirement or social security (his Father's only 2 sources of income)
The deceased had a CONTRACT (account holder's agreement) in which he allowed to bank to take the offset.

That contract likely trumps any other protections that the accounts might have had against other creditors or judicial process.

Probably should have kept the vehicle and continued making the payments until the vehicle got sold. Surrendering the vehicle was a repossession (a default) that activated the offset process.
 

latigo

Senior Member
#5
Then you lied. (?) There obviously was money in the estate since the deceased had checking and savings accounts. . . . . . blah, blah, blah . . . . . .
Before you charge Maggie with mendaciousness, Herr insurance adjuster perhaps you could explain why Section 5302 (a) of the California Probate Code did not become operative immediately upon the death of a party to the jointly held accounts; by reasons of which the father's estate may have no claim to the sums remaining on deposit?

Not only do you lack "clear and convincing evidence", but being without privy to any transactions regarding said accounts have not a scintilla of evidence to the contrary!
 

Zigner

Senior Member, Non-Attorney
#6
Before you charge Maggie with mendaciousness, Herr insurance adjuster perhaps you could explain why Section 5302 (a) of the California Probate Code did not become operative immediately upon the death of a party to the jointly held accounts; by reasons of which the father's estate may have no claim to the sums remaining on deposit?

Not only do you lack "clear and convincing evidence", but being without privy to any transactions regarding said accounts have not a scintilla of evidence to the contrary!
Strange, I would think a contract (account agreement), signed by the now-deceased co-owner could certainly rise to the level of "clear and convincing evidence" that the now-deceased co-owner intended for his funds in the account to be used to offset any amounts due/unpaid on the loan.

ETA: I agree that we are not privy to the actual transaction history for the account, but based on the original post, I am under the assumption that this was dad's account (ie: his money) and the son was on the account so the money would pass to him upon dad's death. I doubt that son contributed one thin cent to the account...but I could, of course, be wrong ;)
 

justalayman

Senior Member
#7
A joint account ceases to be property of the decedent at the time of their demise. That means it would transfer to the joijnt account holder at that moment


BUT given this is a credit union I would not be surprised that the terms of having an account allowed the credit union to use their right of offset to be able to retain money owed to the credit union. They often do have unique right of offset.

Transaction history is irrelevent it was a joint ownership where each held equal rights to all of the money in the account. That’s why one always needs to be aware of with whom they may commingle their funds with. It was “their” money.

So, op needs to ask the credit union folks by what right the money has been retained. I suspect they will gladly provide the documents that do so, if they do have such a right.
 

Zigner

Senior Member, Non-Attorney
#8
A joint account ceases to be property of the decedent at the time of their demise. That means it would transfer to the joijnt account holder at that moment ...
Read the probate code section. In this case, it's not so cut and dry.


Transaction history is irrelevent it was a joint ownership where each held equal rights to all of the money in the account. That’s why one always needs to be aware of with whom they may commingle their funds with. It was “their” money.
Again, read the probate code - it's not so cut and dry.

So, op needs to ask the credit union folks by what right the money has been retained. I suspect they will gladly provide the documents that do so, if they do have such a right.
I don't disagree that a conversation with the credit union is in order.
 

HRZ

Senior Member
#9
Absent a prior default by now deceased, there is no offset triggered or mentioned . And merely to die does not trigger a default. , but seemingly to die vests ownership in the survivor of a jtwros account ? WE are in the dark about the status of people who told lender here is your car back, pot is empty...may have been unwise move, in hindsight ..but in sequence of events ...when did ownership vest with survivor. And when did any official empowered individual representing estate notify lender of intent not to pay ....?
 

latigo

Senior Member
#10
Strange, I would think a contract (account agreement), signed by the now-deceased co-owner could certainly rise to the level of "clear and convincing evidence" that the now-deceased co-owner intended for his funds in the account to be used to offset any amounts due/unpaid on the loan. . . . . .
To me that simply begs the question. Which is did the funds remaining on deposit at the death of the father automatically become the property of the surviving party to the accounts as per Section 5302(a)? If so, then no body is lying!

Moreover, any clear and convincing proof of a contrary intent - that is that any funds remaining in the accounts upon death of the father would pass to his estate and not to the son - would seemingly be limited to evidence existing prior to the death of the father and not some action taken by the son post mortem.
 

Zigner

Senior Member, Non-Attorney
#11
To me that simply begs the question. Which is did the funds remaining on deposit at the death of the father automatically become the property of the surviving party to the accounts as per Section 5302(a)? If so, then no body is lying!

Moreover, any clear and convincing proof of a contrary intent - that is that any funds remaining in the accounts upon death of the father would pass to his estate and not to the son - would seemingly be limited to evidence existing prior to the death of the father and not some action taken by the son post mortem.
I see that you replied to my post, but I don't see how your reply is related to my post. Sorry.
 
#12
I see nothing relevant to whom has deposits in the account. The code section spoke to situations where there aree 2 or more survivors.

As to ownership devolving to the joint tenaqnt at death; the exception would be if there is clear and convincing evidence of other intentions. It simply being in an account where decedent also had a loan is not clear intent it’s purpose was to secure the loan, in my opinion.

I stand by my statement; unless there is something within the terms agreed to by the account holder, I see no right of the CU to hold the funds. If there is verbiage in the terms (which I suspect there is. CU’s are sneaky that way), to allow an offset, then they have a right to hold it.

Speaking with the CU is likely to provide the op with the answer they seek.
 

Zigner

Senior Member, Non-Attorney
#13
I see nothing relevant to whom has deposits in the account. The code section spoke to situations where there aree 2 or more survivors.
See section 5301.

As to ownership devolving to the joint tenaqnt at death; the exception would be if there is clear and convincing evidence of other intentions. It simply being in an account where decedent also had a loan is not clear intent it’s purpose was to secure the loan, in my opinion.

I stand by my statement; unless there is something within the terms agreed to by the account holder, I see no right of the CU to hold the funds. If there is verbiage in the terms (which I suspect there is. CU’s are sneaky that way), to The right of setoff is clearly laid out in the account agreement. It can be aallow an offset, then they have a right to hold it.
In a credit union (in particular), the right of setoff is very clear in the account agreement.


Speaking with the CU is likely to provide the op with the answer they seek.
Agreed.
 
#14
See section 5301.

In a credit union (in particular), the right of setoff is very clear in the account agreement.


Agreed.
5301

a) An account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each, unless there is clear and convincing evidence of a different intent.


While living. Was there something that I missed that may apply to a jointly owned account after the death of any or all of the account holders? Nothing I could see.
 

LdiJ

Senior Member
#15
See section 5301.

In a credit union (in particular), the right of setoff is very clear in the account agreement.


Agreed.
I agree that its common with credit unions that they have the right to offset other accounts for any loans given by the credit union.

However, nothing in this thread actually indicated that any kind of contract was signed for such. AJ just assumed it in his responses. He is probably right, but its still an assumption.
 
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