Legal Question in Wills and Trusts in Virginia

Re: Depositing checks after a person's death

Whthout researching the matter, my gut feeling is that the checks were part of the decedent's estate. As such, they should not have been deposited in the joint account. If the joint account holder knew of the death and still deposited the checks, it's fraud; if the joint account holder didn't know, (an apparently unlikely event, since he is referred to as husband, leading to the conclusion the decedent was wife) that may excuse the act but doesn't alter the fact that the checks are property of the estate of the decedent. The bank is probably in the clear unless they knew of the death of the decedent, though that's a question to be researched.

Re: Depositing checks after a person's death

The executor of the decedent's estate should be

filing an action against the errant husband for the return of the trust funds to which he was not entitled.

Re: Depositing checks after a person's death

First, I don't know if you can imagine how much your question sounds like a law professor's question on a law school exam. Brings back strange memories.

Your description is short and vague. It would be hazardous to make any firm decision without reviewing the actual documents and the exact details. So this is a seat-of-the-pants impression, not a firm analysis or decision.

However, what I understand from your question is that interest checks that accrued DURING the 2nd quarter of the year (while the beneficiary was still alive) were cut and mailed out in July to the "first tier" beneficiary. (I am not sure what "first tier" means exactly, but I am assume it means that until that person dies, the other beneficiaries take nothing.)

The general rule for trusts is that the corpus (principal) belongs to the final beneficiaries (remaindermen) and the interest or investment income belongs to the beneficiaries.

Therefore, the interest or investment income on the principal actually belonged to the beneficiary as (her?) personal property. That is, even if the check had not yet been cut or sent, all income on the investments up until the date of the beneficiary's death is the personal property of the beneficiary, just as much as if the cash were in her own personal bank account. It is the beneficiary's property if the investment income or interest was earned before the date of her death, even if it had not yet been distributed from the trust.

However, your question involves another problem. The only person who can endorse and cash the checks is the decedent's EXECUTOR ("Personal Representative" in Virginia). Almost certainly that will be the husband. But the Court has to officially appoint someone as executor. And the person who is the executor must follow the terms of the decedent's will, if any. Either way, the executor must file an inventory of all of the decedent's property -- including the checks -- and show where it all went, and that it obeyed the will, if any.

I would think that the husband's actions would be considered harmless as a temporary measure to preserve the situation ONLY IF the husband then follows through with the proper procedures and transfers the money over to be handled as part of the decedent's estate.

Should the bank have deposited unendorsed checks? Probably not. I find that bizarre. In fact if the money were somehow lost to the estate or proper HEIRS of the decedent (NOT beneficiaries of the trust), the bank would probably have to reimburse any lost funds for failing to demand proper endorsement of the checks. But if the money found its way to the proper place, I don' tknow that there would be any issue with it.