What to do when a Mountain America account holder dies

Not the way most families assume. The Membership Agreement provides that accounts payable to more than one beneficiary are treated as JOINT TENANCIES WITHOUT RIGHTS OF SURVIVORSHIP, and that no amount is paid to any beneficiary — or to that beneficiary's heirs or successors — who is not living at the time the account becomes payable. So if you name three children and one of them dies before you, that child's share does not pass to their own children; it stays with the surviving beneficiaries. If the goal is for a deceased child's share to go to the grandchildren, a POD designation on a Mountain America account will not do it, and the account has to be titled to a trust instead. Two more mechanics matter: the account becomes payable to the beneficiaries only on the death of the LAST surviving owner, not the first; and either owner may change a designated beneficiary by written direction during their lifetime. POD designations also do not apply to organization or business accounts, though proprietors and single-member LLCs may name a beneficiary.

Yes. The Membership Agreement impresses a statutory and consensual lien on all funds in every individual and joint share account, regardless of who contributed them, and states plainly that payment of any sums to a joint owner, beneficiary, or other party is subject to payment of all outstanding obligations owed to the credit union. The death clause repeats the point: all debts owed to the credit union are paid from the funds in the accounts before any payment is made. Mountain America may also place an administrative freeze on the accounts, without notice, to preserve those lien and setoff rights. The lien does not reach an IRA, a Keogh, a tax escrow, an irrevocable trust, or a fiduciary account, which are carved out of the pledge. One practical consequence for an executor: a POD beneficiary of a Mountain America account cannot count on the full balance until the credit union has settled what the member owed it.

Two separate clauses in the Membership Agreement cover this, and they cut in opposite directions. On the benefit payments: there is an obligation to notify the credit union IMMEDIATELY of the death of any person receiving federal or state retirement, welfare, or benefit payments by electronic deposit, and if Mountain America is required to reimburse the government for a payment deposited after the death, it may deduct the returned amount from any of the accounts and demand repayment on demand of any shortfall. Money spent out of a post-death benefit deposit can therefore come back on the family. On the certificate: the standard early withdrawal penalty is 90 days of dividends for terms of 12 months or less, 180 days for terms over 12 and under 48 months, and 365 days for terms of 48 months or more — but the agreement gives the credit union discretion to grant a premature withdrawal with no penalty, or with a reduced penalty, in the event of the owner's death or legal incompetence. It is discretionary, not automatic, so ask for it explicitly when you present the death certificate.