The Illinois Banking Act permits banks to establish deposit accounts for minors with the same terms as if the minor is an adult. However, it is not clear under Illinois law whether a parent’s signature on behalf of a minor would be binding to create a joint tenancy with a right of survivorship for an account.

The Illinois Joint Tenancy Act requires that all joint account owners sign an account agreement in order to create a joint tenancy with a right of survivorship. If a minor is too young to sign such an agreement, there is no guarantee that Illinois courts would uphold the parent’s signature on behalf of a minor. While there are few relevant cases outside of the personal injury context, at least one Illinois court has refused to enforce an agreement signed by a parent on behalf of a minor who was too young to sign on their own behalf, and courts in other states have reached similar conclusions. On the other hand, at least one Illinois court has upheld a parent’s signature on behalf of a minor on a contingency fee agreement with an attorney that the court deemed to be reasonable.

Given the uncertainty of a parent’s signature on behalf of a minor under Illinois case law, we believe the prudent approach would be to not treat a parent’s signature on behalf of their child as binding or sufficient to create a joint tenancy with a right of survivorship. Also, we do not believe the child has the authority to transact on the account, as the parent’s signature on behalf of the child likely is unenforceable.

As to whether this account would qualify for separate FDIC insurance as a joint ownership account in these circumstances is an open question. Generally, to qualify for separate insurance as a joint ownership account, all joint owners must have “personally signed a deposit account signature card,” unless the joint account is a certificate of deposit. (We note that the FDIC recently proposed a rule allowing banks to satisfy this signature card requirement with information “establishing co-ownership of the deposit account,” such as “evidence of usage of the deposit account by each co-owner”; however, it is unlikely that an infant could establish such evidence of usage.)

As an alternative, the parent may wish to establish a custodial account (such as an account under the Uniform Transfers to Minors Act) whereby an adult custodian opens the account and manages the funds on behalf of the minor. The customer also may consider establishing a payable on death (POD) deposit account with the minor listed as a beneficiary.

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.”)

• Joint Tenancy Act, 765 ILCS 1005/2 (“Except as to executors and trustees, and except also where by will or other instrument in writing expressing an intention to create a joint tenancy in personal property with the right of survivorship, the right or incident of survivorship as between joint tenants or owners of personal property is hereby abolished, and all such joint tenancies or ownerships shall, to all intents and purposes, be deemed tenancies in common.”)

• Schmidgall v. Engelke, 81 Ill.App.2d 103 (3rd Dist. 1967) (A parent by his relationship to minor is without authority to enter into contracts binding on a minor.)

• Villalobos v. Cicero School Dist. 99, 362 Ill.App.3d 704, 712 (1st Dist. 2005) (“Illinois courts have held that neither a next friend nor a court-appointed guardian can approve a settlement of a minor’s claim without court approval. . . . [The minor] is not in the same position as minors who were actual signatories, like those involved in the cases cited by defendants. . . . Thus, we are inclined to think that disaffirmance and ratification do not play the same role in cases, such as this, where the minor is not a party to the original contract but, rather, is purportedly represented by his parents.”)

• Leonard C. Arnold, Ltd. v. Northern Trust Co., 116 Ill.2d 157, 166 (1987) (“We therefore hold that a contingent-fee agreement, entered into on behalf of a minor by his next friend, is enforceable unless the terms are unreasonable.”)

• FDIC Deposit Insurance Regulations, 12 CFR 330.9(a) (“Qualifying joint accounts, whether owned as joint tenants with the right of survivorship, as tenants in common or as tenants by the entirety, shall be insured separately from any individually owned (single ownership) deposit accounts maintained by the co-owners. . . .”)

• FDIC Deposit Insurance Regulations, 12 CFR 330.9(c) (“(1) A joint deposit account shall be deemed to be a qualifying joint account, for purposes of this section, only if:

• (i) All co-owners of the funds in the account are ‘natural persons’ (as defined in § 330.1(l
• (ii) Each co-owner has personally signed a deposit account signature card; and
• (iii) Each co-owner possesses withdrawal rights on the same basis.

(2) The signature-card requirement of paragraph (c)(1)(ii) of this section shall not apply to certificates of deposit, to any deposit obligation evidenced by a negotiable instrument, or to any account maintained by an agent, nominee, guardian, custodian or conservator on behalf of two or more persons.”)