IBA Compliance Connection

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An elderly customer opened a joint payable on death (POD) account with his sister a year ago. Recently, the customer became incapacitated and now has a court-appointed guardian. Can we add the guardian to the joint account? The guardianship order indicates that the guardian has authority to act on behalf of our customer with respect to the customer’s bank accounts. The guardian also is named as the POD account beneficiary (which occurred before he was appointed guardian). Can an account that has a guardian associated with it continue to have a beneficiary?

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Yes, we believe that you may add the guardian to the joint account. A guardian’s specific rights and responsibilities with respect to a ward are established through a court order when the guardian is appointed. In this case, you have indicated that the court order establishes the guardian’s authority to transact on the customer’s accounts. Consequently, the guardian steps into the shoes of your customer and may transact on the account to the same extent as the customer, for the benefit of the customer.

Under the Probate Act, a guardianship generally terminates when the ward dies. Thus, when the elderly customer passes away, the guardianship will end — along with the individual’s authority to transact on the account — and the individual should remain the account beneficiary, subject to the point below.

If the guardian is not a member of the customer’s family and the account exceeds $20,000, the POD transfer may be subject to a rebuttable presumption that the transfer of the account to the guardian/beneficiary is void, if challenged in court. Article IVa of the Probate Act (“Presumptively Void Transfers”) provides safeguards intended to protect a “person who needs assistance with activities of daily living” from financial exploitation in specified circumstances.

For resources related to our guidance, please see:

  • Illinois Probate Act, 755 ILCS 5/11a-17(a) (“To the extent ordered by the court and under the direction of the court, the guardian of the person shall have custody of the ward and the ward’s minor and adult dependent children and shall procure for them and shall make provision for their support, care, comfort, health, education and maintenance, and professional services as are appropriate….”) 
  • Illinois Probate Act, 755 ILCS 5/24-12 (“The office of a representative of a ward terminates . . . when the ward dies.”)
  • Illinois Probate Act, 755 ILCS 5/4a-5 (“‘Caregiver’ means a person who voluntarily, or in exchange for compensation, has assumed responsibility for all or a portion of the care of another person who needs assistance with activities of daily living. ‘Caregiver’ includes a caregiver's spouse, cohabitant, child, or employee. ‘Caregiver’ does not include a family member of the person receiving assistance.”)
  • Illinois Probate Act, 755 ILCS 5/4a-10 (“In any civil action in which a transfer instrument is being challenged, there is a rebuttable presumption, except as provided in Section 4a-15, that the transfer instrument is void if the transferee is a caregiver and the fair market value of the transferred property exceeds $20,000.”)
  • Illinois Probate Act, 755 ILCS 5/4a-5 (“‘Transfer instrument’ means the legal document intended to effectuate a transfer effective on or after the transferor's death and includes, without limitation, a will, trust, deed, form designated as payable on death, contract, or other beneficiary designation form.”)