How important are your government earned checks each month? If you or your spouse where to die, the checks will stop. Most people think immediately of social security checks, and with good reason; most retirees receive at least part of their income from this program. The money will also stop when you die for Veterans Administration benefits, civil service annuities, and many other federal programs.
Anytime a recipient dies or becomes incapacitated before the date of a federal payment, it triggers a process called reclamation. Your financial institution must return the funds to the government on your behalf. It is part of their agreement with the government in return for be able to process ACH payments (direct deposits). Once the payment is returned, the appropriate federal agency will contact the survivors with direction on how to properly qualify to receive the payment.
Financial institutions become liable for reclamation once they are aware of the death. The may learn of the death by notification from a federal agency, local probate court, interaction with any representative of the family or estate or their personal knowledge of the death. In other cases, any written record of the death may be accepted as true. Some institutions proactively monitor local newspapers obituary sections to keep their records current.
As the survivor of a beneficiary, you should notify any payer agencies as quickly as possible. This will expedite any partial payments due to the estate and in the event that the survivor may continue to receive a benefit, to start that process. The sooner those agencies are updated, the less likely it will be that you will have to repay a payment.
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