IBA Compliance Connection

Your go to source for compliance!

One of our customers died, leaving a savings account and a CD listing her daughter as the beneficiary. She also had an IRA listing another daughter as the beneficiary. All of the beneficiary designations use the daughters’ maiden names, but both daughters have since married. Now, their driver’s licenses show their married names, but their social security cards show their maiden names. If they present marriage certificates showing both their maiden names and married names, can we distribute the accounts to them?

—

by

admin

Yes, you may distribute the accounts once the beneficiaries provide their marriage certificates, although your institution has the right to withhold distributions until you are satisfied that they have provided adequate identification.

We believe it is up to your institution to determine what constitutes adequate identification. Other than what is required by your account agreements, we are not aware of any law or rule that specifies what identification must be used to identify an account beneficiary. For example, an Illinois court dealing with a disparity between a beneficiary designation and the beneficiary’s legal name found that the bank could distribute the accounts to the beneficiary. The decision was based on various forms of evidence, including the beneficiary’s school records, health records, birth certificate, address, and testimony from friends and relatives, since the beneficiary had used two different maiden names and had since adopted a married name.

The facts you gave us are comparatively simple, since the beneficiaries have changed names only once (albeit without consistently updating their identification documents). If their marriage certificates show that their maiden names match the beneficiary designations for the accounts, we believe there is a very low risk of distributing them to both daughters.

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 . . . (ii) identification from each beneficiary then living . . . . If the institution, in its discretion, is unable to identify one or more beneficiaries . . . 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.”)
  • Gates v. State Loan and Sav. Ass’n of Granite City, 131 Ill.App.3d 625, 632 (5th Dist. 1985) (Based on school records, health records, birth certificate, address and witness testimony, the court affirmed a trial court’s finding that “Donna Jean Snider, Donna Snider, Donna Jean Allison, and Donna Jean Mayberry are one and the same.”)