Are we required to notify named beneficiaries of a payable on death (POD) account after learning of a customer’s death? Would a POD account beneficiary become an “apparent owner of property presumed abandoned” under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA)?

We are not aware of any law that would require you to notify POD account beneficiaries after learning of a customer’s death. However, we recommend reviewing your account agreements to determine whether they require notification to the POD account beneficiaries. Further, such beneficiaries would be considered “apparent owners” under the Illinois RUUPA.

The Illinois Trust and Payable on Death Accounts Act (POD Act) does not require a bank to initiate contact with the beneficiaries of a POD account. It does require that a bank distribute a POD account to the beneficiaries after the death of the last surviving owner, but it also requires account beneficiaries to first provide identification and written direction before the bank is required to close the account and distribute it to the beneficiaries.

A POD account beneficiary would be considered an “apparent owner” under the Illinois RUUPA, which defines an “apparent owner” as a person appearing on your records as the owner of an account and an “owner” as “any person that has a legal, beneficial, or equitable interest in property subject to this Act.” Additionally, the POD Act provides that after the death of the last surviving holder of a POD account, the beneficiary or beneficiaries become the owner(s) of the account, provided that the beneficiaries (who may or may not be natural persons) are then living or in existence. Consequently, named POD beneficiaries would be considered apparent owners of the account under the Illinois RUUPA by virtue of their beneficial interest in the account before the POD account owner’s death and as the account owners after the POD account holder’s death.

For resources related to our guidance, please see:

Illinois Trust and Payable on Death Accounts Act, 205 ILCS 625/10 (“Upon the death of the last surviving trustee or holder of the account, the institution that maintains the account shall distribute the proceeds to the beneficiary or beneficiaries designated in the agreement controlling the account without further liability. No institution, however, shall be required to distribute the account proceeds until the institution receives (i) legal evidence of death of all trustees or holders of the account, (ii) 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 (iii) written direction from each beneficiary to close the account and distribute the proceeds in a form acceptable to the institution. If the institution, in its discretion, is unable to identify one or more beneficiaries, or cannot determine the lawful existence of any beneficiary, or cannot determine a party authorized to collect on behalf of any beneficiary, or if conflicting claims to the account are made by the beneficiaries or other interested parties, then the institution may refuse to distribute the proceeds, without liability to any beneficiary or other party, until the institution receives a determination of ownership by a court of appropriate jurisdiction.”)

Illinois Trust and Payable on Death Accounts Act, 205 ILCS 625/4(c) (“Upon the death of the last surviving holder of the account, the beneficiary designated to be the owner of the account (i) who is then living, if the beneficiary is a natural person, or (ii) that maintains a lawful existence under the state or federal authority pursuant to which it was organized, if the beneficiary is not a natural person, shall be the sole owner of the account, unless more than one beneficiary is so designated and then living or in existence, in which case those beneficiaries shall hold the account in equal shares as tenants in common with no right of survivorship as between those beneficiaries. If no beneficiary designated as the owner of the account on the death of the last surviving holder is then living or in existence, the proceeds shall vest in the estate of the last surviving holder of the account.”)

Illinois RUUPA, 765 ILCS 1026/15-102(3) (“‘Apparent owner’ means a person whose name appears on the records of a holder as the owner of property held, issued, or owing by the holder.”)

Illinois RUUPA, 765 ILCS 1026/15-102(21) (“‘Owner’, unless the context otherwise requires, means a person that has a legal, beneficial, or equitable interest in property subject to this Act or the person’s legal representative when acting on behalf of the owner. The term includes: (A) a depositor, for a deposit; (B) a beneficiary, for a trust other than a deposit in trust; (C) a creditor, claimant, or payee, for other property; and (D) the lawful bearer of a record that may be used to obtain money, a reward, or a thing of value.”)

Illinois RUUPA Administrative Rules, 74 Ill. Adm. Code 760.290(a) (“1) Apparent owner interest shall include the activity of beneficiaries and estate executors or other persons who have a legal or equitable right to ownership or custody of the property when the apparent owner as listed in the records of the holder is deceased. 2)Thus, while a deceased apparent owner can no longer indicate interest in their own property, the new owner or his/her agent(s) may indicate interest in the property and, thus, prevent abandonment.”)