Imagine this. Your bank suddenly, without warning, closes all of your accounts, then sends you checks for the balances in the mail a few days later - - without any explanation whatsoever! And, further imagine that all the while you’re thinking your auto deposits (like your Social Security and investment income) are being received, your outstanding checks or online payments are being made, and you can go to your ATM if you need cash (until you get there and your balances show ZERO!).
Well, that’s what happened to me. Worse yet, it then took weeks to resolve with the bank, after five in-person visits to the local branch!
At the time, I thought this was a “one-off”, unusual occurrence. Then, when I did some internet research, I realized the same crazy, whirlwind set of events has also recently happened to thousands of others! So, I feel compelled to share my story, as a consumer warning to you (and I’ll also offer some tips on how you can avoid going through this mini-disaster).
Table of Contents
Here’s How the Story Begins
My dear, 98-year-old mother has listed me as her Successor Trustee in her Living Trust. In the past few years, Mom’s Alzheimer’s has gotten worse and I have taken over from her as her Trustee to handle all of her financial matters, including paying her bills. She has bank accounts, in the name of her Trust, with one of the big four “too big to fail” banks. I decided to take some money out of an account elsewhere and open up a new CD account at her primary bank, since it had some great interest rate offers. I brought in a cashier’s check and I deposited it into a new CD account in the name of her Living Trust, just like her other existing accounts. Even though the bank already had a copy of her Living Trust, and a “Trust Certification” verifying that I was authorized to serve as Successor Trustee, they requested that I provide this information once again in order to open up the new CD. So I did. The bank gave me a receipt for the deposit, then I went home and saw that the new account showed up on her online banking portal. Everything seemed fine.
About two weeks later, I received a letter in the mail from the bank addressed to me, notifying me that this new account was closed, and enclosing a check for the entire amount! There was no reason given as to why the account was closed, just a phone number if I had any questions. On the very next day, I received three more letters from the bank notifying me that all of Mom’s other prior accounts had been closed too, along with a check for the amounts! I was perplexed and dumbfounded.
So, I called the telephone number provided in the letters and, as you probably would guess, I got routed to several different people in different departments, was forced to recite the story over and over multiple times, and finally was told that what I was asking about was “confidential” and they could not speak to me! After an hour or so of that, I had no option but to drive over to the bank’s local branch.
When I walked into the local branch, I thankfully saw a familiar face - - a banker who knew me and had worked with me on Mom’s accounts. I explained the story to him and even he was taken aback by what had happened. He had never heard of this happening to any clients! Since the accounts were closed, he had no way to see any information on his computer, so he jumped on the phone and spoke to several people to find out what was going on. After sitting with him in the bank for over two hours, as he was placed on several lengthy holds, the matter finally got kicked up to a regional branch manager. She immediately drove to the branch to tell me, “Mr. Kavesh, I have no idea why they did this and they won’t tell me either!”
The regional manager then told me that because it was a Friday, she would do some more investigating and call me after the weekend. We made an appointment to meet again on that following Monday afternoon. I came in again and I was relieved because it appeared she had gotten to the bottom of the problem. She said that the Living Trust document that was provided to them did not state that I was the Successor Trustee. As the estate planning attorney who prepared this document, I knew that was incorrect. I referred her to exactly where it says that I am to serve as Successor Trustee upon providing documentation by two doctor letters that my mother can no longer handle her own affairs. And copies of the doctor letters were attached. She was clearly embarrassed and then there was a long pause. She apologized and said that she could see it clear as day and she also could see on the bank’s system that I had been acting in this capacity for several years on Mom’s older accounts. We thought, there must have been another reason they closed all the accounts, that they weren’t telling us.
The branch manager said she would look into it further and reach out to me as soon as she found out what was going on. “Soon” turned out to mean a full week later, when she called me and said she had some “confidential” information, and asked that I come down to the branch to discuss it with her.
I went back yet again to the local bank branch and the branch manager explained that the accounts had been closed because my mother had a history of regular monthly deposits into her accounts and this large CD deposit was unusual and immediately raised a red flag with the bank’s fraud and security department. Shockingly, the resolution to the red flag, according to the bank’s policies and procedures, was for that department to simply close the accounts and return the funds without even attempting to contact me, the account holder. WOW!
Thankfully, once all that was cleaned up, they were able to help me open up brand new accounts for Mom, including the CD - - after I came back twice more, once to deposit their own cashier’s checks and wait for them to clear, and another time to sign the new account forms. I then had to get new debit cards, checks, change the routing of direct deposits, and set up the accounts to be able to pay bills online and so forth. Needless to say, this whole ordeal not only caused me a lot of aggravation, but it also cost me over 10 hours of my time to resolve.
Somehow, I wasn’t so sure this was the end of it, so when I got home I did a bit of research and found several online articles about banks suddenly closing thousands of accounts with little to no warning. Customers often didn’t find out until their checks bounced or they couldn’t withdraw cash from an ATM. Apparently, banks were being required to comply with some new and stricter government regulations to prevent fraudulent and criminal activity. The resulting avalanche of flagged accounts then forced banks to simply close the accounts with no communication to the customers!
As If All This Wasn’t Enough,
Just as I Began to Write This Article,
Guess What Happened Next…
I received three more bank letters, including checks, simply stating that the new accounts I had just opened had been rejected and closed!
The crazy process began all over again! But this time I demanded a final resolution of this seemingly never-ending battle or I would move all of my Mom’s accounts, as well as mine, to another bank. Thankfully, that got their attention and I was directed to a previously unknown department called, “Branch Complaints Escalation”. After several back-and-forth calls with a customer service representative and with her supervisor, I was now told that the “red flag” that caused the accounts to be closed was this ridiculous, meaningless detail.
Apparently, when my Mom’s accounts were originally opened, they were titled in the name and date of her original Trust. The new CD account was being opened in the name and date of Mom’s since amended Trust. The Trust Certification which our law firm provides clearly indicated both names and dates, which they said triggered confusion - - and rather than call us, the lawyers, to confirm that placing title in either name and date would have the same legal effect, they just opted to close them! (NOTE: In my over 40 years as an estate planning attorney, I’ve never seen nor heard a bank rejecting and closing an account for this reason, rather than easily resolving the issue.)
Finally, after yet two more trips to the bank, one to deposit their own checks and another to re-open all the accounts, it was handled - - once and for all!
I am sure you don’t want to go through this kind of terrible ordeal, so…
Here Are a Few Tips
to Avoid This from Happening to You
- TIP #1: Periodically Visit Your Local Bank Branch. One of my takeaways was that my previous frequent visits to the same local bank branch and the relationship I had developed with the employees at that location was one of the main reasons that I was able to grab their attention and get their help with resolving the issue. The banker I worked with and the branch manager had provided me their direct contact information, so that I had the peace of mind of being able to reach someone directly with any questions or concerns. So many people today choose to do virtual banking thanks to mobile deposits and online accounts and rarely frequent a local bank branch. I would encourage you to stop by a local bank branch and develop the trust and familiarity with those that work at that location (and them with you!).
- TIP #2: Give the Bank Your Most Recent “Trust Certification”. Assuming the account you are opening is to be titled in the name of your Living Trust, be sure that the bank gets the most recent attorney-provided Trust Certification, specifying the exact way title should be held. And tell the bank, if they have any questions, to call your attorney directly! (That usually solves things right then and there!)
- TIP #3: Check Your Communication Settings. I asked the branch manager why I was never notified via text about what was going on with the accounts, before they just closed them and sent checks. I explained how so many of my accounts at other banks, as well as my credit cards, alert me with a text about anything going on with my account. She pulled up my communication settings and said that my personal communication preferences were set so that the institution should call me. Unfortunately, since I have a SPAM/Robocall blocking service on my phone, those calls never got through to me. She was able to update my settings so that I would be immediately notified via text if there was any future issue with any of my accounts.
- TIP #4: Check Your Regular, Postal Mailbox Every Day. One bad habit that I’ve admittedly developed over the years is to only check my home mailbox every few days, when I remember or right before the date each month that I pay bills. I don’t get much “snail mail” these days, but the letters and checks that the bank sent sat in my mailbox longer than they should have. Another reason you will want to check your mailbox every day is because the U.S. Postal Service has warned against the surge in mail theft, so if you have a mailbox with no security options to prevent theft, it may be advisable to consider getting a P.O. Box and having your mail (especially any checks or important mail) delivered there instead. I was lucky that these several, large cashier checks for the closed accounts didn’t fall into the wrong hands!
- TIP #5: Notify Your Bank Ahead of Time. There may be occasions when you may make unusual deposits. Perhaps you are moving funds from one institution to another (like what we were doing), or you sell an asset, or otherwise receive a large sum of cash. These types of “unusual” transactions are now triggering alerts to the bank that something is abnormal. To comply with government regulations and avoid being liable for possible criminal activity, banks are flagging much more suspicious activity and taking swift (and, as we’ve seen, severe) action! Let the bank know you will be depositing large amounts ahead of time so they place adequate explanatory notes in their computer system.
My wish is that you, nor anyone else, ever have to go through the incredible hassle I did. Hopefully, by sharing my story and providing some practical tips, my experience will wind up helping others.
