We have an elderly customer who added her daughter to her account as a co-owner. The daughter is going to be granted a power of attorney for the customer, and both the customer and her daughter would like the daughter to be removed as an account owner. Typically, when a joint account owner wishes to remove a co-owner from the account, we close the account and open a new account for the sole owner. However, in this case, where both consent to the daughter’s removal from the account, can we have the customer and her daughter sign a form acknowledging her removal? Is there specific language that should be included in such a form?

Yes, we believe you may remove the daughter from the joint account by having the customer and her daughter sign a written acknowledgment of the daughter’s removal.

Under the Illinois Joint Tenancy Act, funds held in a joint account may be “paid to any one of” the account owners. Unless otherwise stated in your account agreement, this gives the daughter the authority to pay all of the account funds to her mother, which she may accomplish by removing her own name from the account. We note that there is conflicting case law in Illinois as to whether joint account owners may unilaterally remove other joint owners from an account without their consent or signatures; however, the concerns about unilaterally removing another account owner are inapplicable in this case, where both parties are agreeing to the daughter’s removal.

We would suggest that the written acknowledgment signed by your customer and her daughter clearly indicate the daughter’s intent to be removed from the account and to relinquish any funds in the account to the remaining owner. You also may wish to include language requiring the daughter to discontinue use of any checks, debit cards or other access devices for the account.

Additionally, your bank might follow its typical procedures of closing the joint account and opening a new individual account, in addition to obtaining the written acknowledgment discussed above. Asking your customer to sign a new signature card will create a clear record of the change in account titling and ensures that your account records are updated to reflect that the account no longer is a joint account.

For resources related to our guidance, please see:

Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank or trust company 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.”)

In re Estate of Macak, 302 N.E.2d 436, 437–38 (1st Dist. 1973) (“[T]he nature of a joint tenancy agreement is such that it may not be terminated by a unilateral action of one of the parties, even though each has the authority to draw out all of the money.”)

Siemianoski v. Union State Bank of S. Chicago, 242 Ill. App. 390, 392, 394–95 (1st Dist. 1926) (“On September 22, 1921, after a quarrel with his wife, Rydzynski went to the bank alone and told Walter J. Prybylinski, an official of the bank, that he wanted to revoke his wife's authority ‘to draw money out’ of the account. . . . In the case at bar Rydzynski did not attempt to sever or terminate his interest in the joint account. He attempted to terminate the joint account altogether. But in our opinion the joint account could not be terminated altogether except by the mutual agreement of Rydzynski and his wife.”)

Drenckpohl v. Barker, 625 N.E.2d 651, 656 (5th Dist. 1993) (“The provision on the back of the certificates of deposit was applicable to the joint tenants at the time the joint tenancy was created, and it permits any one of the joint tenants to receive payment on the instruments by surrendering them to State Bank. . . . According to the terms incorporated into the certificates of deposit, Velma Drenckpohl was permitted to invade the corpus of the certificates of deposit to the detriment of the other joint tenants. It is undisputed that she did so, and she deleted Merle and Wendell as joint tenants.”)

FDIC Deposit Insurance Rules, 12 CFR 330.5(a) (“Except as indicated in this paragraph (a)(1) or as provided in §330.3(j), in determining the amount of insurance available to each depositor, the FDIC shall presume that deposited funds are actually owned in the manner indicated on the deposit account records of the insured depository institution. . . .”)