Updated: Jun 25, 2021
This column first appeared in the San Antonio Express News and other Hearst Newspapers on May 15, 2020.
Dear Mr. Premack: My mother died in mid-February. Social Security was informed of her death, and we filed her final 1040 income tax return with the IRS in early April. Last week her account received an online deposit of $1200 saying it was her stimulus check under the CARES act. Is this money she was entitled to, so we keep it? Or is she not entitled to it and the IRS made an error? What next? – G.A.
According to multiple reports the IRS sent a lot of payments to dead people, though the government is not releasing just how many stimulus checks were wrongly issued. The CARES act and IRS call the funds Economic Impact Payments, but the virus is not going to have a negative financial impact on someone who is already deceased.
Can you keep the money? Only if your relative died after the date the payment was received. If your relative was alive, got the payment, and later died then your relative was entitled to the payment. The funds are an asset that belonged to your relative before death, so the funds pass along as part of your relative’s estate, following their instructions in their Will.
If your relative died before the date the payment was received, the funds did not become the property of your relative and must be returned. The IRS has issued instructions on what steps you must take.
If the payment was received in the form of a paper check, you should a) write "Void" in the endorsement section on the back of the check, b) mail the voided check to the IRS, and c) include a note telling them that your relative died before the payment was received.
If the payment was a paper check and you already cashed it, you should a) mail your own check or money order to the IRS, b) make your check payable to “U.S. Treasury” and write “2020EIP” and the social security number of the deceased relative on the memo portion, and c) include a note telling them that your relative died before the payment was received.
The IRS makes no comment on just how you would have accomplished cashing a check which was made out to your deceased relative. The bank may have allowed you to deposit the funds if you were a co-signer on the account, in which case the money is still in the account and you have authority to write a check from the account. If you cashed the check and pocketed the money, then you personally must send the same amount back to the IRS.
If the payment was a direct deposit to your relative’s bank account, the IRS instructs that you mail a check or money order from that account to the IRS, b) make it payable to “U.S. Treasury” and write “2020EIP” and the social security number of the deceased relative in the memo, and c) include a note telling them your relative died before the payment was received.
Checks from a Texas decedent should be mailed to Austin Internal Revenue Service Center, 3651 S Interregional Hwy 35, Austin, TX 78741.If the IRS payment was direct deposited to your deceased relative’s account, then the instructions to send them a check may be difficult to complete. If you are a co-signer on the account, the bank should allow you to write a check from the account. If you had a right of survivorship or were pay on death beneficiary for the account, the bank should allow you to write a check. But if the account was your relative’s personal solely held account, you will not have access until you probate your deceased relative’s Will. Consult with the individual named by your deceased relative as Executor in the Will; the Executor should consult with an experienced probate attorney to determine the next appropriate legal procedures.
Paul Premack is a Certified Elder Law Attorney, handling Wills and Trusts, Probate, and Elder Law issues. He is licensed to practice law in Texas and Washington. View past legal columns or submit free questions on those legal issues via www.Premack.com.
Here are instructions from the IRS:
If the payment was a paper check:
Write "Void" in the endorsement section on the back of the check.
Mail the voided Treasury check immediately to the appropriate IRS location listed below.
Don't staple, bend, or paper clip the check.
Include a note stating the reason for returning the check.
If the payment was a paper check and you have cashed it, or if the payment was a direct deposit:
Submit a personal check, money order, etc., immediately to the IRS location listed below.
Write on the check/money order made payable to “U.S. Treasury” and write 2020EIP, and the taxpayer identification number (social security number or individual taxpayer identification number) of the recipient of the check.
Include a brief explanation of the reason for returning the EIP.
For Texas residents, use this IRS address:
Austin Internal Revenue Service
3651 S Interregional Hwy 35
Austin, TX 78741