The Illinois Trust and Payable on Death Accounts Act (Act) only addresses the authority for financial institutions to distribute the proceeds of a payable-on-death (P.O.D.) account upon the owner’s death and is silent on whether the institution may distribute account statements that were issued when the account owner was alive. As explained below, however, you may lose the safe harbor provided by the Act, since the safe harbor only covers distributions made from the P.O.D. account. We also note that federal and state privacy laws prohibit you from disclosing personal financial information, such as account statements. Although there is an exception to the federal privacy prohibition for disclosure to persons that hold a legal or beneficial interest relating to the customer, case law supports the position that the beneficiary on a P.O.D. account does not hold any interest in the account until the account owner has died.

The Act states that upon death of the last surviving trustee or holder of a P.O.D. account, the financial institution shall “distribute the proceeds to the beneficiary or beneficiaries designated in the agreement controlling the account.” 205 ILCS 625/10. The Act provides a safe harbor for an institution that makes distributions “in compliance with the Act,” and states that the institution “shall to the extent of each such payment, be released from all claims of any person claiming an interest in the account for such payment so made.” 205 ILCS 625/5. Providing account statements that were issued when the P.O.D. account owner was alive is not addressed by this provision, and an account statement is not the same as distributions from the account. In other words, if you are doing anything more than making distributions in compliance with the Act, you may not qualify for the safe harbor and conceivably could be subject to claims made by a representative of the decedent’s estate.

Additionally, providing private customer information such as an account statement would be a disclosure of non-public personal financial information that is protected by both federal privacy law (the Gramm-Leach-Bliley Act and its implementing regulation, Regulation P) and state privacy law (Section 48.1 of the Illinois Banking Act). Non-public personal financial information includes any information “about a consumer resulting from any transaction involving a financial product or service between you and a consumer,” and a specific example provided in Regulation P of non-public personal financial information is “account balance information, payment history, overdraft history, and credit or debit card purchase information.” 12 CFR 1016.3(q)(1)(ii)12 CFR 1016.3(q)(2)(i)(B). Similarly, the Illinois Banking Act includes as protected customer information “a statement . . . or other record on any deposit or account, which shows each transaction in or with respect to that account.” 205 ILCS 5/48.1(a)(2).

The federal privacy regulations do permit banks to disclose account information to “persons holding a legal or beneficial interest relating to the consumer.” 12 CFR 1016.15(a)(2)(iv). However, there is no comparable exception in the state privacy prohibition against the disclosure of protected information. Under Illinois law, in the case of a P.O.D. account, the beneficiary only has a legal and beneficial interest after the owner’s death. See In re Estate of Gubala, 81 Ill. App.2d 378, 383 (1967) (“the beneficiary of a ‘P.O.D. account’ cannot withdraw any of the money prior to the owner’s death and has no legal redress to protect himself against a wasteful dissipation of the funds by the owner. In effect, his interest comes into being only at the owner’s death.”)

We also note another court decision supporting the conclusion that a beneficiary of a P.O.D account is entitled to receive statements occurring only after the owner’s death. A Texas appellate court held that a bank satisfied its obligation to provide a customer with sufficient information for the customer to detect unauthorized transactions when it sent account statements to the account owner, and subsequently to the P.O.D. account beneficiary only after the P.O.D. account owner was deceased. The court stated that the P.O.D. account passed on to the beneficiary only upon the account owner’s death. Coffey v. Bank of America, No. 09-12-00113-CV (Tex. Ct. App., 2013).

Consequently, we believe that it would not be advisable to provide the P.O.D. account beneficiary with account statements that were issued when the account owner was alive.

Please be advised that our analysis should be considered as guidance and does not constitute legal advice. You may wish to consult with your bank counsel regarding this question.