IBA Compliance Connection

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A grandma opened an account with her minor grandchild. The account agreement creates a joint account with a right of survivorship. However, the child did not sign the account agreement. The grandma signed in her own name and on behalf of the child. We used both the child’s social security number and the grandma’s to open the account. We do not have any evidence or documentation that the grandma is the child’s legal guardian. The child never has transacted on the account, and the grandma has passed away. Is this account now part of the grandma’s estate?

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We recommend consulting with bank counsel regarding the ownership of the account, but in our view, a joint tenancy never was created, so the account passed to the estate of the grandma upon her death.

The Illinois Banking Act permits banks to establish deposit accounts for minors with the same terms as if the minor is an adult. However, a right of survivorship may be established only when all account owners sign an agreement to that effect. Here, the minor child did not sign such an agreement, and you don’t know whether the grandma signed the agreement in the minor child’s name in the capacity of a legal guardian. Consequently, we do not believe that you should treat the account as a joint account, in which case the minor would not have a right of survivorship to the account.

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) (“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.”)
  • Doubler v. Doubler, 412 Ill. 597, 601 (1952) (“In our opinion, therefore, the proper construction of the section here involved under the facts of this case is that an agreement signed by [the husband] and [the wife] permitting payment to the survivor was necessary to create rights of survivorship in the deposit and that the changing of the names on the account by a third party, the bank cashier, at the direction of one of the parties alone, is insufficient to satisfy the requirements of the statute.”)