Bamboozled: Bank of America holds funds hostage after customer’s death, family says

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Robert Petersen knew he was going to die soon.

He made plans to enter hospice care on May 14.

He also planned for his brother, Frederick Petersen, to manage his affairs: before his death with a power of attorney, and after his death as his executor. His sister-in-law Joan Petersen would help.

Robert Petersen had no real assets except for his home, Joan Petersen said. He took a reverse mortgage on the home with Champion Mortgage in 2007 so he could access his home’s equity for living expenses.

“He requested that my husband, as his power of attorney, draw $20,000 from this line of credit with Champion Mortgage to help cover his funeral expenses,” Joan Petersen said.

Documents show Champion received the request on May 12, and the funds were to be  deposited into Robert Petersen’s Bank of America account.

But the next day — one day before he was to move into hospice care — Robert Petersen died.

Since that time, the surviving Petersens have been deluged with red tape, fighting with Champion and Bank of America over the money.

You see, the money did get to the Bank of America account, but despite receiving all the requested paperwork multiple times, the bank refused to release the money. It’s been locked up for months now, causing Frederick and Joan Petersen to lay out more than $10,000 to cover Robert’s final expenses and other bills, and to waste lots of hours lost in bureaucracy.

At first, the delay didn’t seem like a big deal. The funds posted to the Bank of America account on May 18, the couple said, and they went to their local Bank of America branch on May 22.

Joan Petersen said their rep explained what paperwork was needed to close Robert’s two accounts.

“She advised that before we could establish the accounts for the estate we needed an O-1 certificate from the state of New Jersey, but the bank would release 50 percent of the funds without it,” Joan Petersen said.

To receive the 50 percent, they’d need to present a tax ID for the estate, an original death certificate, the testamentary letter from surrogate court and a letter of instruction advising Bank of America that they’d like access to 50 percent of the funds.

Read on.

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