[WSBAPT] Payment of Debts out of Primary Checking without Following Creditor Procedures

[Candace Wilkerson]

Wow, that’s really scary.  Thanks for the warning; I’ll watch out for that with my clients.

Best,
Candace Wilkerson

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Jennifer L White
Sent: Tuesday, March 16, 2021 2:01 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Payment of Debts out of Primary Checking without Following Creditor Procedures

BECU is the WORST!!!!
Cy is absolutely spot on. They have a cross collateralization provision buried deep in their account agreements that allows for them to do this to unsuspecting customers. Worse yet, the event of death is defined as an act of default. Like you typically have a lot of control over THAT ☹
War story: My client’s mother had a BECU HELOC and one small bank account. She dies and BECU immediately whips out every dime of the bank account. Keep in mind that they were fully secured with a DOT on the real estate. My client was the only beneficiary, but a man of very little means. He and his wife could barely survive on their combined wages, and could not afford to fund an extra house payment. BECU said “tough donuts” to you!  The only saving grace was that he found a diamond ring sitting in his mother’s denture soaking box (almost threw it away without looking inside). He was able to sell the ring and had $$ to pay the HELOC until the house sold.

When I see EP clients with BECU accounts and BECU debt, I let them know this cross collateralization information and suggest that they consider moving the bulk of any $$ to somewhere else.

Jennifer L. White, Esq.
[cid:image002.jpg at 01D71A71.A8AB8A80]

jen at appletreelaw.com<mailto:jen at appletreelaw.com>
PO Box 11037
Yakima, WA 98909
509.225.9813

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Cyrus Field
Sent: Tuesday, March 16, 2021 12:00 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Payment of Debts out of Primary Checking without Following Creditor Procedures

I may have mentioned this before but it used to be credit unions were allowed to cross collateralize accounts (e.g. credit card secured by checking account) under federal law (the price paid for lower fees?), and most did- I ran into this years ago when I practiced bankruptcy law in Oregon years ago. As a result, debtors were advised to withdraw funds from the account, and convert to exempt assets, before filing for bankruptcy.  Obviously harder for dead debtor to do as train has already left the station. I suspect CU is acting within their rights.  Thanks, Cy


Cyrus W. Field, Attorney at Law (admitted in Washington and Oregon)
phone: 360-472-1223 Mail: POB 367, Shaw Island, WA 98286 Office: 640 Mullis St. Friday Harbor, WA
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Roger Hawkes
Sent: Tuesday, March 16, 2021 10:27 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Payment of Debts out of Primary Checking without Following Creditor Procedures

I think that is true of many financial institutions; someone needs to be motivated to challenge the practice.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Rebecca King
Sent: Tuesday, March 16, 2021 10:04 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Payment of Debts out of Primary Checking without Following Creditor Procedures

Hi Brent,

This is a common practice with BECU.  My understanding is that BECU has language in their credit card and loan contracts which allow them to remove the funds directly from the decedent’s account.  It has come up on the listserve several times, but I don’t think anyone has actually challenged BECU on this practice.

Warmest regards,
Rebecca King
Attorney

Northwest Elder Law Group
2150 N. 107th Street, Suite 501
Seattle, WA 98133
Main: (206) 937-6102
Direct Line and Fax: (206) 866-6544

Providing Services in Elder Law

CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, is for the sole use of the intended recipient(s) and may contain confidential and privileged information protected by law. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Brent Williams-Ruth
Sent: Tuesday, March 16, 2021 9:37 AM
To: WSBA Probate & Trust Listserv <WSBAPT at lists.wsbarppt.com<mailto:WSBAPT at lists.wsbarppt.com>>
Subject: [WSBAPT] Payment of Debts out of Primary Checking without Following Creditor Procedures

Good Morning Colleagues!

I write to share an experience that a PR of mine just had with BECU. *NOTE* this story ends fine, in that there were other assets, but just as a cautionary tale to anyone else.

Decedent had a primary bank account with BECU. They also had a credit card, a personal line of credit, and a car loan. When the PR went to obtain the funds from the primary account to put into the Estate account - BECU paid off all of their own debts FIRST and gave the remainder to my PR in the form of a cashier's check.

She pushed back and said - wait, don't you have to go through the notice to creditor's period and BECU allegedly told her that this was permitted based upon the terms and conditions.

As I said above, the estate is solvent and they would have been paid had they gone through the normal process - but this is the first time in my 6 years of independent practice that I have ever had this happen.

Just wanted to share with others.
Brent

Brent Williams-Ruth (preferred pronoun: he/him)
Attorney-At-Law

Law Offices of Brent Williams-Ruth, a division of BWR Consulting, PLLC

Physical Address: 500 S 336th Street, Suite 214; Federal Way, WA 98003

**EFFECTIVE IMMEDIATELY** All mail sent through the USPS should be sent to the following address: PO BOX 3319; Federal Way, WA 98063

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