A husband and wife co-own a sole proprietorship. The account for the sole proprietorship is currently titled “John Doe, doing business as The Doe Family Business.” The couple would like to make sure that the wife can continue to use the account if the husband passes away. The wife is already an authorized signer, but should we also add her name to the account title? If we change the title, do we need to close the existing account and open a new one?

We recommend closing the current account and opening a new account with both spouses included in the title. An authorized signer’s privileges are only valid while the account owner is alive. In contrast, a joint account owner has the right to continue using the account after the death of a co-owner, provided the parties agreed to a right of survivorship in their account agreement.

Therefore, to clarify the wife’s ownership interest, we recommend opening a new account in the name of both spouses with an account agreement that establishes a right of survivorship. (When opening the new account, be sure to obtain the social security number of both spouses.)

We also note that you are not required to close the current account in order to change its title. However, we consider the creation of a new account to be the best practice in order to avoid any number of complications that could arise by re-titling an existing account.

For resources related to our guidance, please see:

Ferguson v. Bill Berger Associates, Inc., 704 N.E.2d 830, 840 (1st Dist. 1998) (Under Illinois law, an agency relationship, like that between an accountholder and an authorized signer, terminates when the principal (the accountholder) dies (unless the agency relationship was irrevocable).)

Konfrst v. Stehlik, 13 N.E.3d 278, 284 (Ill. App. 1st Dist. 2014) (Illinois bank accounts created in the name of two persons shall be valid joint tenancies with right of survivorship if both persons sign an agreement permitting the funds to be payable to either party whether the others be living or not.)

Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank or trust company transacting business in this State has been made or shall hereafter be made in the names of 2 or more persons payable to them when the account is opened or thereafter, the deposit or any part thereof or any interest or dividend thereon may be paid to any one of those persons whether the other or others be living or not, and when an agreement permitting such payment is signed by all those persons at the time the account is opened or thereafter the receipt or acquittance of the person so paid shall be valid and sufficient discharge from all parties to the bank for any payments so made.”)

31 CFR 1020.220(a)(2) (Describing Customer Identification Program procedures, which require, at a minimum, that you collect a name, date of birth, address, and taxpayer identification number from every customer).