What to do when a Flagstar Bank account holder dies

The payee presents the death certificate and government-issued ID. The account belongs to the payees only after all the owners have died; while any owner is living the payee has no right of withdrawal.^{1, 2}

Where two or more payees survive all the owners, they take in equal shares without right of survivorship among them.^{1, 2}

Flagstar states it may not pay checks, orders or withdrawal requests signed by a surviving owner after the death of any owner until it has what it needs.^{1, 2}

Where one owner survives, the balance belongs to that survivor. Where several survive, each keeps a proportionate share and the deceased owner's portion is shared equally among them.^{1, 2}

For an individual account with no payable-on-death payee and no surviving joint owner, the funds become part of the estate, and Flagstar deals with the appointed executor or administrator.^{1, 2}

Principal cannot come out before maturity unless Flagstar consents, and the agreement states that special rules apply on the death or legal incompetence of the owner. Ask Flagstar about the death-of-owner exception to the early withdrawal penalty rather than assuming one applies.¹

A deceased customer's Flagstar mortgage or home equity line of credit³

The customer agrees to notify Flagstar promptly if any person with a right to withdraw funds from the account dies or becomes legally incompetent.¹

The account stops working once Flagstar has notice of the death and a reasonable opportunity to act on it. Until then the agreement allows Flagstar to keep honoring checks, items and instructions.¹

Flagstar may require the death certificate and an estate tax waiver before releasing funds, and may require a reasonable amount of time to pass before paying out.¹

In some circumstances Flagstar may require a surety bond and an agreement to cover its expenses before paying out.¹

Flagstar's Terms and Conditions (Rev 2/24) allow the bank to pay or certify checks drawn on or before the date of death for up to ten business days after the death, unless someone claiming an interest in the account orders a stop payment.¹

The New York Community Bank-division agreement in the same booklet states ten days rather than ten business days.¹

The death of the account owner automatically terminates a power of attorney. For individual accounts the funds become part of the estate and are administered the same as accounts with no power of attorney.¹

Flagstar reserves a right of set-off: where an account owner owes the bank money, it may apply the balance of a joint account to that debt.¹

A levy, attachment, restraining order, court order, or a request from a bankruptcy trustee or insolvency representative relating to any one owner lets Flagstar freeze a joint, payable-on-death, or Totten trust account, including the entire balance.¹