Topic: Account Titling
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A customer has multiple accounts with our bank. The customer gave their daughter power of attorney (POA) with full rights. One of the customer’s accounts was retitled to reflect this, but the other account was not. Can the daughter access the other account even though she is not listed in the account title as having POA? Is a POA agreement specific to the account number, or does it apply to the customer and their entire portfolio?
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We believe the daughter may access all of your customer’s accounts — provided that she has been granted a valid POA for property using the Illinois Statutory Short Form Power of Attorney for Property, and the “financial institution transactions” category of powers has not been stricken out. In Illinois, the Statutory Short Form Power of…
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What is the most common practice for handling requests to remove a living joint account holder from a demand deposit account? We usually close the account and open a new one, but we heard that some banks allow removal of a joint account holder if the proper paperwork is signed by all of the co-owners. Are there any benefits to using one method over the other? We are concerned about unauthorized transactions and disagreements between co-owners if we allow removal without closing the account.
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We believe that there are more benefits to your bank’s approach when ownership of a joint account changes — closing the account and opening a new account, with a new account number and new account agreement signed by the owner. As you have found, we are aware that some banks will remove a co-owner from…
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How should we title an account for a general partnership that obtained an assumed name certificate from the county in the name of two unmarried individuals and a business? They did not present partnership papers or an employer identification number (EIN). Should we require partnership papers and an EIN to title the account in the assumed business name, or can we open the account in the name of the individuals doing business as (DBA) the assumed name and use one of the individual’s social security numbers? Also, would the partners have been required to present a partnership agreement to the county to obtain the assumed name certificate?
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We recommend requiring an EIN to open a partnership account, since the IRS requires partnerships to obtain an EIN for purposes of filing partnership tax returns. Whether you should require the partnership to present a partnership agreement or other documentation depends on your bank’s customer identification program (CIP), which should specify what documentation you need…
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We are opening a deposit account and extending a loan to a single-member LLC that is using the member’s social security number. Should this customer’s account be titled as “John Doe, sole member of Doe’s Auto Parts, LLC” or “Doe’s Auto Parts, LLC”?
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We recommend titling the account in the LLC’s name, since the LLC is a separate entity from the member and the funds belong to the LLC, not to the member. The IRS requires a single-member LLC that elects to be treated as a corporation, has any employees, or will be required to file any excise…
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Can an LLC that is 100% owned by a corporation, uses the same federal employer identification number as the corporation, and is considered a disregarded entity for tax purposes use the same demand deposit account as the controlling corporation? The account would be titled in the corporation’s name, with the LLC named as a “doing business as” on the account, and we would allow the customer to deposit items payable to either the LLC or the corporation into the account.
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We believe that a corporation and its wholly-owned subsidiary LLC could operate under the same bank account. However, we do not recommend designating the LLC as a “doing business as” name on the account — which we would view as inaccurate. Instead, we believe it would be accurate to title the account in both the…
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A customer would like to open an account for a bible study group, but he does not have any information pertaining to the church. This account does not appear to qualify for unincorporated organization or club accounts. Can we open the account using the customer’s name with the title of the bible study group?
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We believe that a bible study group could qualify as an unincorporated association for deposit insurance purposes. An unincorporated association must consist of two or more persons formed for some religious, educational, charitable, social or other noncommercial purpose, and we believe that a bible study group would fit that definition. Consequently, you may title the…
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How should we title a class reunion account? Should it be: “Class Reunion 19XX,” with a second line listing the name of the individual opening the account? Do we need an employer identification number (EIN) for the account?
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We believe that your customer’s class reunion account can be titled either in the name of the individual(s) who own the funds or in the name of an unincorporated association (that is, an organization formed for a noncommercial purpose with deposits separate from those of the members comprising the association). While deposit insurance may…
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Our farmer customers who operate as sole proprietors open accounts using their social security numbers. If a farmer would like their spouse to be a co-owner on a farm account (e.g. John Doe or Jane Doe Farm Account), can the account still be classified as a sole proprietorship? In the past, we have allowed only one owner on a sole proprietorship account, with a spouse listed as an authorized signer. What is the proper way to title this type of account?
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We are not aware of any prohibition against a sole proprietor account being titled in the name of two spouses. Under the Internal Revenue Code, two spouses who run a business together may file a tax return as a sole proprietorship if they fulfill all the requirements for being considered a “qualified joint venture.” The…