We are not aware of any state law prohibition against a sole proprietor account being titled in the name of two spouses. Under the Internal Revenue Code, two spouses who run a business together may file a tax return as a sole proprietorship. The spouses will co-own the sole proprietorship account if they both sign the account agreement establishing account ownership.
In addition, we do not believe Illinois law prevents a sole proprietorship accountholder from naming a payable-on-death beneficiary. Accountholders may designate payable-on-death beneficiaries for “any account, deposit, certificate of deposit, withdrawable capital account or credit union share in any institution.” There is no exclusion for sole proprietorship accounts or other business purpose accounts.
For resources related to our guidance, please see:
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IRS webpage, Election for Married Couples Unincorporated Businesses (“Spouses electing qualified joint venture status are treated as sole proprietors for Federal tax purposes. . . .”)
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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.”)
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Illinois Trust and Payable on Death Accounts Act, 205 ILCS 625/4 (“If one or more persons opening or holding an account sign an agreement with the institution providing that on the death of the last surviving person designated as holder the account shall be paid to or held by one or more designated beneficiaries, the account . . . .”)
- Illinois Trust and Payable on Death Accounts Act, 205 ILCS 625/2(b) (“‘Account’ includes any account, deposit, certificate of deposit, withdrawable capital account or credit union share in any institution.”)