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Death of Acct. Owner

A serious real life problem with any secrecy account is the death of the customer. Although it is possible to provide for an alternate signatory in the event of death, this only works if the bank is in fact advised of the death.

For example, Steve Smith opens an account and specifies that his wife Betty Smith will become the signatory upon Steve’s death. Twenty years later Steve dies, having forgotten to tell Betty about the account. The bank has no knowledge of Steve’s death, and so the account just sits there. The money is out of the family forever.

What if Steve does tell Betty but she dies before him? Again, on Steve’s subsequent death nobody knows about the account, and so no one claims it. We have seen this problem played out in real life with dramatic consequences. In the 1930s and 1940s, many European Jews deposited their savings in Swiss banks to protect them from the Nazis. When these individuals later perished in the Holocaust, surviving family members often had no knowledge about the account and the money went unclaimed. No one knows the total amount which was lost but estimates range from $50 million to $5 billion. Only recently, because of intense international pressure, have the Swiss government and the banks attempted to identify these accounts and distribute the funds to the surviving relatives.

In our example, if Steve wants to make sure that his family claims the money, he will have to make provisions so that the executor of his estate is or becomes aware of the account in the event of Steve’s death. The executor, in possession of the death certificate and the proper authorization, will be able to assume control of the account on behalf of Steve’s estate. However, the proper information must be available-i.e. the name of the bank and the account information-and that requires arrangements and a mechanism for disclosure during lifetime.

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