Death won’t stop banks from taking fees

Laws allow them to continue deducting from a deceased customer’s funds for years.

LOS ANGELES TIMESSeptember 21, 2013 

Rocco Bersane died in March at the age of 56 after he was hospitalized for a gallbladder infection and liver failure.

At the time of his death, Bersane had about $1,175 in a Bank of America checking account. His disability-related Social Security checks were automatically deposited there.

BofA acknowledged in a letter to Bersane’s next of kin shortly after his death that it had received notification of his passing.

Yet since that time, the bank continued deducting a $12 monthly maintenance fee from Bersane’s account.

“The man is dead,” said Patricia Burge, 60, of Norwalk, Calif., who lived with Bersane for 19 years. “How do you keep charging fees to a dead man?”

Bersane’s experience in the banking afterlife highlights the importance of getting a financial house in order before the worst happens. It also demonstrates the lack of laws or regulations that address a bank’s responsibilities in such circumstances.

“Is it wrong morally? Yes,” said Marlene Seltzer, a Los Angeles probate attorney. “Legally? No. The law says they can get away with it.”

CALIFORNIA LAW

Bersane died without a will. Under Section 13100 of the California Probate Code, any amount less than $150,000 can be claimed by a deceased person’s heirs after 40 days.

Rocco Bersane Jr., 32, who lives in North Carolina, said he’s aware of the money sitting in his father’s checking account. However, he’s unsure how to proceed.

He said he spoke with the bank and was left with the impression that the paperwork for recovering his father’s funds was so complicated, it could require hundreds of dollars up front in attorney fees. If so, Bersane said, it might not be worth it.

But he said BofA shouldn’t be entitled to keep charging his dead father a monthly fee.

“That’s just wrong,” Bersane said.

Under California law, funds in inactive bank accounts must be handed over to the state for safekeeping after three years. During that three-year period, though, a bank can keep charging fees to maintain the account — even in cases like Bersane’s, when the bank knows that he won’t be turning up within that time frame or any time thereafter.

In a letter dated March 22 to Bersane and Burge, the bank said that it had been “informed that Rocco Bersane passed away.” It requested a copy of his death certificate “to make sure the financial relationship is handled appropriately.”

Burge did as requested.

In June, she received a notice from BofA informing her that “we’ve closed our case for Rocco Bersane,” noting that “we have taken appropriate action on the financial relationship based on the information we’ve been provided.”

The bank then continued to deduct monthly fees from Bersane’s account.

“I don’t want the money,” Burge said. “I just want to know how they can get away with this. Why don’t they just hand the money to the state?”

BANKING POLICIES

Garin Casaleggio, a spokesman for state Controller John Chiang, said officials would be happy to take the money off BofA’s hands and hold it until claimed by a relative. But he said the state has no authority to demand the funds until three years of account inactivity have passed.

There are apparently no federal laws that apply in such cases. A spokeswoman for the Consumer Financial Protection Bureau said inactive or dormant bank accounts typically fall under state regulation.

Betty Riess, a spokeswoman for BofA, said the bank’s policy in the event of a customer’s death is to stop charging account fees “for up to six months” so that family members can get their affairs in order.

In Bersane’s case, she said, no fees were withdrawn in March and April, but BofA started docking the account again as of May. Riess had no explanation for why the fee resumed so quickly.

“It was a mess-up on our part,” she said.

The monthly fees for May through July will be returned to Bersane’s account, Riess said. Moreover, BofA will extend the fee waiver through January, she said.

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