28 Dec Why won’t the bank release part of this inherited account?

Q. A bank is refusing to release 50% of the funds, held in cash and CD’s, in a bank account my wife inherited from her brother. She is the 100% POD beneficiary. The bank said my wife does not meet the criteria for “blanket waiver,” which would have allowed 50% of the money to be moved now. She is only the 100% beneficiary, not the executor or administrator or anything else with regard to her brother’s estate or bank account. Do you happen to know if she is entitled to the 50% and if so how can she prove it to the bank representative so she can get the 50% distribution. She is working to get the New Jersey tax waiver.
— Frustrated

A. We’re sorry to hear your wife lost her brother.

It’s not uncommon for people to have issues with banks, and what they say is required, after someone dies.

Under New Jersey law, the blanket waiver allows financial institutions to release 50% of the funds from an account without a tax waiver (Form 01), said Mark Balian, a partner at Wells, Jaworski & Liebman, LLP in Paramus.

“However, the waiver provision applies to executors, administrators, joint tenants, or other legal representatives of the estate — not directly to a POD (Payable on Death) beneficiary,” Balian said.

So because your wife is the POD beneficiary and not the executor or administrator, the bank’s interpretation appears consistent with the guideline, he said.

“The intent of this law is to provide the fiduciary responsible for paying any taxes due in connection with the estate, i.e. the executor or administrator, with liquidity to administer the estate, but to also hold back sufficient funds as security to ensure that taxes are paid.” he said. “An exception is also made for joint tenants since the surviving party is deemed an owner on title.”

Absent responsibility or ownership, the funds are generally not released, Balian said.

“In this instance, obtaining the tax waiver is typically the path of least resistance, and the right path, to release the funds and continue on with the estate administration process,” he said.

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This story was originally published in December 2024.

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