The attorney representing a deceased customer’s estate has requested information about the customer’s credit life insurance policy on her mortgaged residential real estate. To facilitate the information request, the attorney would like to present us with a small estate affidavit and the customer’s death certificate. Can we provide this information to the attorney? We know the customer’s estate includes real property, so is it proper for us to rely on a small estate affidavit? Or should we require letters of office?

Yes, we believe that your bank may release information about your deceased customer’s credit life insurance policy to the estate’s attorney. However, we recommend consulting with your bank counsel to determine what documentation would be sufficient to establish that the attorney is acting in a fiduciary or representative capacity on behalf of your customer’s estate (while noting that we do not believe a small estate affidavit is appropriate, for the reasons discussed below).

Regulation P permits your bank to disclose customer information to “persons holding a legal or beneficial interest relating to the consumer” and to “persons acting in a fiduciary or representative capacity on behalf of the consumer.” (These exceptions also apply under the Illinois Banking Act’s privacy provisions.) In the absence of letters of office, your bank counsel may determine that some other documentation (such as a written letter of representation or a client engagement letter) would suffice to establish the attorney’s representative role with respect to your customer’s estate. In such case, your bank could rely on Regulation P to release the deceased customer’s credit life insurance information to the presenting attorney.

We do not recommend relying on a small estate affidavit as documentation of the attorney’s representative capacity when real estate is involved. First, we note that the law is unclear on whether small estate affidavits can be used for real property. Admittedly the Illinois Probate Act does not expressly exclude real property from small estate affidavits, and there is no Illinois case law addressing this question. However, most probate attorneys in Illinois (including the attorneys who co-authored an IICLE treatise on estate planning) interpret the Illinois Probate Act’s small estate provisions to apply only when the estate includes personal property, not real property. This is primarily because title insurance companies normally refuse to transfer title to real estate under a small estate affidavit and instead require probate proceedings (with limited exceptions). Consequently, while the plain language of the Probate Act is not clear on this point, we do not recommend relying on a small estate affidavit for any purpose when your customer’s estate includes real property.

For resources related to our guidance, please see:

Probate Act of 1975, Article XXV, 755 ILCS 5/25-1(b)(6) (“The gross value of the decedent's entire personal estate, including the value of all property passing to any party either by intestacy or under a will, does not exceed $100,000. (Here, list each asset, e.g., cash, stock, and its fair market value.);”)

Elements of Illinois Law: Estate Planning and Probate Administration 2015 Edition, Chapter 2.14, Illinois Institute of Continuing Legal Education (IICLE) (“As an initial matter, it is necessary to identify title to the decedent’s assets in order to determine whether probate is necessary. Only assets held in the decedent’s name alone require probate. After identifying the probate assets, it must be decided whether summary administration or a small estate affidavit can be used to collect and distribute the assets. If the value of the probate assets exceeds $100,000 or includes real estate, neither the small estate affidavit nor summary administration is available. Under these circumstances, an estate must be opened to administer the assets properly.”)

Elements of Illinois Law: Estate Planning and Probate Administration 2015 Edition, Chapter 2.7, IICLE (“If the gross value of the decedent’s personal estate is $100,000 or less and the decedent was an Illinois resident, an affidavit may be used to transfer the property to the appropriate beneficiaries under the decedent’s will or those identified under the statute of descent and distribution, and formal probate can be avoided. 755 ILCS 5/25-1. The small estate affidavit procedure is not available if the decedent owned real estate in his or her name alone.”)

Regulation P, 12 CFR 1016.15(a)(2)(iv) (A bank may disclose nonpublic personal information “(iv) to persons holding a legal or beneficial interest related to the consumer; or (v) to persons acting in a fiduciary or representative capacity on behalf of the consumer; . . .”)

IDFPR Interpretive Letter 01-01 (“Section 15 [of Regulation P] provides several other exceptions to the notice and opt-out provisions, including disclosures of information to fiduciaries or representatives of the customer or disclosures made to protect against fraud and unauthorized transactions. Although Section 48.1 of the [Illinois Banking Act] does not explicitly include these exceptions to its opt in requirement, the exceptions enumerated in the federal regulations are consistent with the purpose of Section 48.1 of the Act. Thus, we believe that a state bank need not obtain a customer’s authorization to make disclosures permitted by one of the exceptions contained in Subpart C of the federal regulations.”)