What to do when an Alerus account holder dies

Sent by the institution on request.¹

A single-party account with no payable-on-death designation passes as part of the estate; the executor or a small-estate affiant collects it.²

A multiple-party account with right of survivorship passes to the surviving party or parties.²

A single-party or survivorship account with a pay-on-death designation passes to the named beneficiaries and is not part of the estate. The beneficiary claims directly with a death certificate and ID.²

On a trust-titled account, the successor trustee takes over under the trust agreement, with no probate step.²

The death benefit is paid to the beneficiary of record, and the plan document controls the payment options.¹

A surviving spouse who is the primary beneficiary may roll the account into an inherited IRA or inherited IRA annuity, or leave it in place and manage it as the account owner.¹

A surviving spouse beneficiary takes the HSA as their own HSA as of the date of death; Alerus requires the spouse to have a valid Social Security number.³

For a beneficiary who is not the spouse, the balance stops being an HSA as of the date of death.³

Under Wisconsin's setoff paragraph, a joint or P.O.D. account that requires all parties' signatures to withdraw is subject to setoff only to the extent of the debtor party's net contributions.²

In Wisconsin, a Marital Account with P.O.D. beneficiaries splits at the first death: 50 percent to the surviving party and 50 percent to the deceased party's named P.O.D. beneficiaries.²

The Consumer Terms and Conditions require you to notify Alerus promptly if any person with a right to withdraw funds from the account dies.²

Under section 11.03 of the HSA custodial agreement, the surviving spouse or account beneficiary must tell Alerus of any change in email or mailing address after the death. A notice is effective when posted or sent to the last address in Alerus's records.³

Alerus may keep honoring the decedent's checks, items and instructions until it knows of the death and has had a reasonable opportunity to act. It may pay or certify checks drawn on or before the date of death for up to ten days after the death unless someone claiming an interest orders a stop payment.²

Any power of attorney the decedent gave ends at death. Alerus may honor an agent's transactions until it has written notice or actual knowledge of the death and a reasonable opportunity to act on it.²

If Alerus must reimburse the federal government for a benefit payment directly deposited into the account, it may deduct that amount from the account or any other account you hold with Alerus, without prior notice and at any time, and use any other legal remedy to recover it.²

Under Resolving Account Disputes, Alerus may place an administrative hold on the funds, refusing payment or withdrawal, if the account becomes subject to a claim adverse to the owner's own interest, to others claiming as survivors or beneficiaries, or arising by operation of law.²

Alerus may set off account funds against any due and payable debt an owner owes it, without prior notice. The right does not reach an IRA or similar tax-deferred account, a consumer credit card debt, or an account where the right of withdrawal arises only in a representative capacity.²

Under Pledges, any pledge of the account must first be satisfied before a surviving owner's or beneficiary's rights take effect.²

The Consumer Terms and Conditions carry separate ownership sections for accounts opened in Arizona and North Dakota, Minnesota, Iowa, and Wisconsin, so the same payable-on-death wording produces different outcomes across those states.²

Under Unclaimed Property, funds are surrendered to the state once an account is considered unclaimed under state law, and a claim then has to be presented to the state rather than to Alerus.²

On learning of the death, Alerus reserves the right to make a final HSA distribution to a non-spouse beneficiary without that beneficiary's consent and to place it in an interest-bearing account of its choosing.³

The HSA custodial agreement says a non-spouse beneficiary's balance is taxable to them in that tax year. If the estate is the beneficiary or none is named, the fair market value at the date of death is taxable on the decedent's final personal income tax return.³

Alerus notes that a surviving spouse under 59 1/2 who leaves a retirement plan account in place is exempt from the 10% early-withdrawal penalty, while rolling it into their own IRA before 59 1/2 turns a withdrawal into a penalized distribution.¹