We believe it would be prudent to obtain legal evidence that the payable-on-death (P.O.D.) account owner or trustee has died before you disburse the account proceeds. The Illinois law governing P.O.D. accounts does not appear to require such documentation, but it does include permissive language that grants financial institutions the discretion to wait before distributing account proceeds until they receive legal evidence of death.

Section 10 of the Illinois Trust and Payable on Death Accounts Act, 205 ILCS 625/10, states that upon the 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.”  But Section 10 goes on to state that: “No institution, however, shall be required to distribute the account proceeds until the institution receives (1) legal evidence of death of all trustees or holders of the account, (2) identification from each beneficiary then living, or business records evidencing the lawful existence and parties authorized to collect on behalf of each beneficiary not a natural person, and (3) written direction from each beneficiary to close the account and distribute the proceeds in a form acceptable to the institution.”  Id.

Our interpretation of this language is that your institution is not required to obtain legal evidence of the P.O.D. account owner’s death before disbursing the account proceeds, but at the same time, your institution clearly would be within its rights to do so.