IBA Compliance Connection

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Are there any risks to permitting a child under the age of five, who cannot sign his or her own name, as an owner on a savings account? We also have parents sign as co-owners.

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The Illinois Banking Act permits banks to establish deposit accounts for minors with the same terms as if the minor is an adult. However, we do not recommend establishing an individual deposit account for a minor who is too young to physically sign the account agreement.

Regarding joint accounts with parents, we note that simply adding a minor to an account does not create a joint tenancy with a right of survivorship regarding that account. A right of survivorship may be established only when all account owners sign an agreement to that effect. If the minor is too young to physically sign such an agreement, the minor will not have a right of survivorship to the account, and the question should be asked as to what utility there would be in adding the minor to the account at the present time.

Another option for minors who are too young to physically sign their own account agreements is establishing a custodial account (such as an account under the Uniform Transfers to Minors Act) whereby an adult custodian opens the account and manages its funds on behalf of the minor.

For resources related to our guidance, please see:

  • Illinois Banking Act, 205 ILCS 5/45.1 (“A state bank may accept deposits made by a minor and may open an account in the name of such minor and the rules and regulations of such bank with respect to each such deposit and account shall be as binding upon such minor as if such minor were of full age and legal capacity.”)
  • Joint Tenancy Act, 765 ILCS 1005/2(a) (requiring that in order to establish a right of survivorship in a joint bank account, all account owners must sign a written agreement to that effect)