They’re a savings instrument with a particular bank; they aren’t like government savings bonds – they are essentially savings accounts with that particular bank.
You’ll need to go to the bank which is named on them.
No. There is a secondary market for some CDs, in which they trade like bonds and can be bought by a third party. But paying interest and repaying the principal is the specific obligation of the issuer. For these, you will certainly need to contact the issuer.
When did they mature? If the owner doesn’t take any affirmative action at maturity, the usual practice is that the issuer will roll the principal plus interest into a new CD to the same term.
This describes how things work for you as a beneficiary, it doesn’t sound too complicated:
And it sounds like you may have access to this money without going through probate:
If it’s a small local institution, there may be no easy way to avoid the in-person visit, but it’s a lot less hassle than probate. Make sure you check exactly what documentation they need - it will include I.D., death certificate, maybe other stuff.
Are there other branches of that band closer to you. I’m sure that you have already thought of this but definitely give them a call and ask what they will need and if there is a more convenient location.
If they are in your name you owned them all along, even if your Mom bought them. They were in essence a gift to you the day she bought them, even if she kept them at her house until now.
If they are in your name they are not, and never were part of her estate. And her being alive or dead has nothing to do with them. And her death cert is totally unneeded since they are your CDs and always have been.
Now often financial accounts (and therefore CDs) are set up like “Account belongs to Mom, pay on death to Son.” In which case it was her money until the body cooled at which point it was yours. In this situation, for you to cash these you’ll need her DC to show the bank. And in this case these are not part of her probate estate and never were. They pass “around probate” and any instructions in her will do not apply to them.
As folks have said, the “CD” isn’t really a certificate, like a piece of paper that has monetary value. The peice of paper you have is nothing more than a bank savings account statement saying acct number 12345 belonging to Bob Smith had value $3456.78 on date 12/34/56. The bank’s computer records will be what has actual value.
If you’re in the US and your mom’s total estate is worth less than about 12 million dollars, there is no federal tax due on the assets. A few states levy their own tax on estates of lower value, so it’s worth checking with an estate lawyer if yours is one of them.
I’m sorry for your loss. It can be tough getting through all the administrative details of a parent’s estate while you’re still adjusting to bereavement, and that’s when you always have to do it.
Receiving money via PoD/ToD is not taxable. Not as to income tax and not as to estate tax. It’s just tax-free money for you. At least at the Federal level and at every state level I’ve lived under. Your state, whatever it is, might be different.
As to IRAs:
If the CD was part of Mom’s IRA, and it was properly titled with you as “beneficiary” (which is different from “Pay/Transfer on Death”) then the money can be moved into what’s called a “Beneficiary IRA” in your name. It’s still kept separate from any other IRA’s you may already own, and has its own RMD rules. But other than that once the beneficiary IRA is set up it can be loosely thought of as just another one of your IRAs. But this movement is not a rollover under the regulations.
If the CD was not part of her IRA then it cannot become a “beneficiary IRA” for you.
It is cash money though. Which means that if you have enough W-2 income to be eligible to make IRA contributions, but have previously lacked the free cash flow to actually make those contributions, now you can use this free cash to make those contributions up to the normal limits for IRA contributions. But that’s no different from you working a side gig to make extra scratch and funding the IRA with the proceeds of that gig.
Gotta be careful to keep “roll-overs”, “beneficiaries”, and “contributions” separate in your mind. Three utterly different situations with utterly different laws and limits applicable. Using the wrong words unwittingly can lead to lots of bad advice from people who aren’t listening carefully or don’t know the differences themselves.
What has been going on since 2010? In my state, there is a time limit to how long a bank can hold money without any contact from the owner - which means the CD cannot just auto-renew until the end of time. The owner at some point must at least send written instructions regarding a renewal or else the bank must turn the money over as unclaimed funds. Don’t make a long drive without making sure the bank still has the funds.
Good point; here in Illinois, if a bank account has no activity or contact for several years, the bank turns the funds over to the state treasury, where it’s held until being claimed by the owner or the heirs.
A CD issued in 2010 that had a 10 year term and auto-renewed in 2020 is only 3 years old now. Since Mom was the owner then and presumably had ongoing dealings with that bank. Likewise if it was a 5-year and she was still dealing with the bank. That CD may have been a 1-year that has renewed 13 times since but Mom filed the later papers elsewhere or lost them, so the OP hasn’t found them.
One of the hard problems of dealing with an estate is whatever papers you find are the ones you find. You have no way of knowing what records you don’t have. Only by checking with whoever issued each piece of paper can you learn the current picture of each account. And even then you may never learn of one where you never found the magic piece of paper.
Which of course is part of why states have unclaimed property laws as you mentioned.
This problem will get a lot worse in the future as all of us switch to e-records tied to passwords only we know and e-logins that will be locked as soon as the institution learns of the death.
It’s common to specify a beneficiary upon your death for specific assets or entire accounts. You retain complete normal ownership and control of the account while you are alive, and you can change the beneficiary at any time as you wish. It makes transfer of assets much simpler when you die, usually without going through probate.
Current rules for beneficiary IRAs is that you must take the distribution within 10 years, five years if it was a Roth IRA.
In terms of the CD, I would call the bank first. I have CDs that automatically cash out to one of my accounts when they mature, so it’s possible that the money is already in a checking or savings account.
I totally know what POD/TOD is. As I’ve explained to the OP in one of my earlier posts. But his terminology was non-standard so I could not be certain I knew what his words meant to him.
One of the challenges of helping folks who admit they’re rank amateurs is they often use the terms they know for situations they don’t understand.