Handling Deceased Account Holders

What do you do when someone passes away? How do you deal with their accounts in DDI so 1099 interest is handled properly?

Reregister All Tax

For couples that are married, filed jointly where tax liability is being moved from one person to the other spouse, you would Reregister All Tax.

All tax from 01/01/XXXX to the day that you are doing this reregister will be moved from Person A to Person B. Since this is the entire years's tax, there is NOT a way to effective date to the death date/last interest payment event.

When this method is used, the new person is absorbing the terms of the original investment- there are no changes to the maturity date or any other details of the investment.

Reregister All Tax FAQs

When someone is marked as “Deceased”, does the system automatically adjust the default Tax ID?

It does not.

In the case of a deceased spouse with joint tenant, is there a need within DDI to change the ownership dropdown listing?

We suggest creating a new sole ownership account for the spouse and then doing a Reregister All Tax from the joint to the sole ownership account to show clearly it went from two people to one individual.

If an account is reregistered, the history doesn’t move with it and the old account appears as a Closed account. How can we pull statements and notify staff that the account is not actually closed?

When running a custom statement, you can pull the history using the investment number and it will pull the history for the entire investment. Use Urgent Memos so that when someone hits the account, it will show a message that the account has moved.

Reregister Tax Split

Reregister Tax Split is used if there is a custodial account with beneficiary(ies) where the original account should have a portion of the taxable 1099 interest and the rest should be on the beneficiary(ies) account.

What is important to understand with this method, is that there is a difference between accrued and earned interest. Earned has been accrued, but not yet paid. When you do a tax split, if there is earned interest, the new investment would start with a negative 1099 interest amount. This is because the interest is earned, but has not been paid and it was earned under the original account holder's tax ID. As interest is earned and paid, it will move from negative to zero to a positive amount.

If there are multiple beneficiaries, you can list them all using the Reregister Tax Split and the 1099 interest will be split evenly (negative or positive).

Reregister Tax Split FAQs

Can we effective date to the date of death?

Once you have paid out interest, the money is gone whether the investor is deceased/you have received the death certificate. You can only effective date back to the last interest payment event. If this was after the date of death, you will be unable to effective date to the date of death. You can do an Investment Financial Adjustment to adjust the 1099 interest manually or leave it as is due to the notification of the date of death.

What do you do if you don’t know someone passed during the last fiscal year and you have already completed year-end?

The only place that you can correct the 1099 interest is within the DDI IRS System using IRS Payee Entry. The investment itself cannot be corrected since it crosses a fiscal/calendar year.

• Navigate to IRS Reporting System> IRS Payee Entry. You will brought to a screen that looks like this:

• Enter your search terms to locate the deceased account holder and click "Edit":

• Adjust the Interest Income under the Boxes 1-8 tab and click "Save":

• Repeat these steps for any new account holders as well.

• Once you have all of the records adjusted, re-run either IRS14 or IRS20 (this is dependent upon your Organization settings).

IMPORTANT! DO NOT re-run IL276. This will wipe out any changes you have made in the DDI IRS System since adjustments are not being made on the Investment level.

• You will then run IRS04 for the Fire System. You should send it as a Correction rather than an Original.

IRS System FAQs

If I am only correcting a few records, do I have to re-run IRS14 or IRS20 for all records?

No! To create only the statements you need to correct, assign an AI code in the IRS System and include only that AI code when re-running IRS14 or IRS20. It doesn't get added to the Constituent record as it only lives within the DDI IRS System:

TIP! This can also be used for IRS04.

Can you take care of tax documents for deceased account holders before publication 1220 is out for the year?

No. You must wait until publication 1220 is ready.