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Supervisor of Banks Yair Avidan said, “The death of an account co-owner is a breaking point. The update of the Directive emphasizes the importance of the banking corporation’s awareness and its conduct with increased sensitivity vis-à-vis the surviving co-owner, by adjusting the service to the surviving co-owner’s needs.

As a preventive step and with the goal of avoiding difficulties in the future, banking corporations are required to increase customers’ awareness regarding the “survivorship” term in an account and regarding the ramifications of their choice, and to act so that their decision is in line with their desire regarding the survivor’s rights.

In addition, the update is also intended to make it easier for the surviving co-owner to deal with existing undertakings in means of payment that were issued in the name of the deceased co-owner, and thus assist the co-owner to continue conducting in an ongoing manner, without the death leading to unwanted ramifications of not making various payments.”

The death of an account co-owner is a difficult event for the surviving co-owner and the deceased’s heirs. With the goal of ensuring that in this difficult period the surviving co-owner will be able to manage the account, there is, within the framework of account opening agreements, the option for co-owners to choose in advance if the account term called “survivorship” will go into effect. This term, when choosing that it applies, enables the surviving co-owner to continue carrying out transactions in the account after a co-owner’s death.

 

In the Banking Supervision Department, it was decided to update the Directive and to establish the new guidelines, with the goal of assisting customers. The need arose due to enquiries from the public that indicated a lack of clarity regarding the meaning of the “survivorship” term, and difficulties in acting in the account after the death of a co-owner in a case in which the partners did not choose that the “survivorship” term will apply.

The update of the Directive provides a response to customers with new joint accounts as well as to those with existing accounts.

Following are the main updates to the Directive:

  • Instructions were established for banking corporations with regard to disclosing and explaining to customers the significance of the “survivorship” term in the joint account opening agreement, with the goal of ensuring customers’ attention and understanding and to assist them in making an informed decision.

In addition, the corporations are required to establish an obligation to choose regarding the expected terms of the condition and to document it, in order to ensure that a directed and informed decision is being made by the partners.

  • The banking corporations are required to accept the choice of the co-owners regarding the going/not going into effect of the term.
  • In order for the partners’ choice to be in line optimally with their needs and wants, the update distinguishes between signature rights defined by the co-owners, under the assumption that they can indicate the intention of the partners in the case of the death of one of them. For example, in accounts with signature rights set as “separate and together”, the banking corporations shall suggest to the customers that the term should be in place.
  • The banking corporations are required to contact all the existing joint account owners who did not choose for the term to apply to them, with the goal of bringing the issue to their attention, to verify their needs, and to the extent that they choose to do so to assist them in making a change in the terms of the agreements in this regard. The banking corporations shall contact such customers within 6 months of the publication date of the Directive, at the latest, and shall make reasonable efforts to assist in completing the process with the customers within 1 year of the publication date of the Directive.
  • Processes were established with the goal of enabling surviving co-owners to act to arrange the existing undertakings in means of payment that were issued for the use of the deceased owner and that are linked to the account, including authorized debits of means of payment and payment transactions. This is with the goal of ensuring continuity of payments, to make things easier for them in the complicated and sensitive situation in which they find themselves, and to prevent unpleasantness and extra work for them.
  • The update to the Directive shall begin 12 months from the date it is published.