IBA Compliance Connection

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A recently deceased customer owned a joint account with their minor child, aged sixteen. As a joint owner with the right of survivorship, does the minor child have ownership of the account and the funds? We are a federal savings bank.

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Yes, we believe that the minor child would have ownership over the account and the funds, provided that both the parent and the child signed the original joint account agreement. The Illinois Joint Tenancy Act provides that a right of survivorship is created when all joint account owners sign an agreement to that effect, and it does not prevent a minor from jointly owning an account with a right of survivorship.

Both the Illinois Savings Bank Act and Illinois Banking Act expressly permit deposit accounts to be held by minors, and federal law does not prohibit minors from opening deposit accounts. Additionally, Illinois courts have held that contracts with minors are voidable by the minor, but not void outright. (There is a risk that the minor could void your account agreement, but it appears the risk of that is low in this scenario.) Thus, if both the parent and minor signed the joint account agreement that included a right of survivorship, then we believe that a valid joint account with a right of survivorship was created.

For resources related to our guidance, please see:

  • Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank . . . 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.”)
  • 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.”)
  • Illinois Savings Bank Act, 205 ILCS 205/7005 (“Deposit accounts of a savings bank may be held as follows: (1) by any individual in his own right, regardless of age or marital status, or by 2 or more individuals; . . .”)
  • Illinois Savings Bank Act, 205 ILCS 205/1006.10 (“‘Savings bank’ means a savings bank operating under this Act, an out-of-state savings bank as defined under this Act, or a savings association defined in the Federal Deposit Insurance Act.”)
  • Federal Deposit Insurance Act, 12 USC 1813(b)(1) (“The term ‘savings association’ means—

(A) any Federal savings association;

(B) any State savings association; and

(C) any corporation (other than a bank) that the Board of Directors and the Comptroller of the Currency jointly determine to be operating in substantially the same manner as a savings association.”)

  • Federal Deposit Insurance Act, 12 USC 1813(b)(2) (“The term ‘Federal savings association’ means any Federal savings association or Federal savings bank which is chartered under section 1464 of this title.”)
  • Bray v. Illinois Nat. Bank of Springfield, 37 Ill.App.3d 286, 288 (4th Dist. 1976) (“[The Joint Tenancy Act] has consistently been interpreted to mean that a joint tenancy with the right of survivorship cannot be created in a deposit account except by parties signing an agreement such as the signature card provides.”)
  • Fletcher v. Marshall, 260 Ill.App.3d 673, 675 (“A contract of a minor is not void ab initio, but merely voidable at the election of the minor upon his attaining majority.”)