Topic: Account Titling
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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?
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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…
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We have a potential business customer that is a receivership and asset management company. The company has a court order appointing it as receiver for a distressed condominium building, which it has full authority to operate, manage and conserve. The company would like to open a business checking account titled in its name, while using the tax identification number for the building’s condominium association. We are not comfortable with this title format and would like to know the correct way to title the account. Also, all checks deposited into the account will be made payable to the company as receiver for the building.
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We recommend titling the account to indicate the fiduciary nature of your customer’s relationship with the condo association for deposit insurance purposes. For example, you could title the account as [Company Name], Receiver/Agent/Custodian for [Condo Association Name]. The FDIC’s deposit insurance rules provide separate deposit insurance for the principal in a fiduciary relationship (the condominium…
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We have a certificate of deposit (CD) held by a grantor trust (our bank is not serving as trustee). When the account was set up, we used the grantor/customer’s social security number. The trust recently was amended to replace the original trustee (the grantor/customer) with his daughter as trustee. The daughter wants us to retitle the account and does not want to obtain an EIN for the trust. Can we retitle a trust account without obtaining an EIN?
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Yes, we believe that your bank may retitle this trust account without requiring an employer identification number (EIN), provided that the trust will continue to file an individual tax return (Form 1040) using the grantor’s social security number (SSN). Generally, the IRS does not require a trust to obtain an EIN if it is a…
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The trustee of a revocable living trust recently set up a savings account and checking account. The trust’s attorney told us to title the accounts in the name of the trust but that any checks should be imprinted with the individual grantors’ names, without reference to the trust. Shouldn’t the checks be titled exactly as the account is titled?
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Yes, we believe that the checks for these accounts should reflect the exact account names. While we do not recommend that a bank interject itself into a trustee’s decisions when merely providing deposit accounts for a trust, we do recommend printing account checks that show the account owner’s name. In this case, the account owner…
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If we have a joint account with rights of survivorship, and one of two owners passes away, can we change the account into an individual account naming only the surviving owner without a signed signature card for the new account? We would like to clear up accounts with a deceased joint owner where we have been unable to contact the surviving owner, sometimes for a period of a year. We also have this problem when a tenant in common dies and the deceased owner’s executor or beneficiary does not remove the deceased owner from the account.
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Yes, your bank may remove a deceased joint owner’s name and social security number from an account, but we do not recommend opening a new account without a signed signature card from the surviving owner. As of the date of death, joint account funds automatically pass to the surviving joint owner. Assuming that your bank…
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For our portfolio consumer mortgage loans, when borrowers receive insurance claim checks, we deposit the checks into escrow accounts from which we disburse funds directly to repair contractors. How should we set up these accounts? Currently, we set them up as savings accounts under the customer’s name, with our bank listed as the custodian. This creates some issues, because when we search our accounts in response to a subpoena or levy or for unpaid child support data matching, these accounts will be listed under the customer’s name, even though the funds in these accounts technically don’t belong to the customer. Should we instead set up the accounts using our bank’s TIN? Should they be deposit or savings accounts?
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We recommend reviewing your mortgage notes and related documents, which may specify your bank’s obligations as to insurance claim proceeds. For example, the Fannie Mae standard note states that the lender is not required to pay interest on property insurance claim proceeds. If your bank’s mortgage notes or other agreements include similar language, then your…
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We title certificate of deposit (CD) accounts that have a payable on death (POD) beneficiary with the word “trustee” next to the owner’s name. Do we have to do this? When we pay out such accounts, it causes problems to issue checks to a “trustee” when there is no formal trust.
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No, we do not recommend including the words “trustee” or “trust” in a POD account title. We are not aware of any specific titling requirements for POD accounts in Illinois law. However, POD accounts are separate and distinct from trust accounts, and the term “trustee” implies the existence of a trust relationship. For resources related to our guidance,…
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Our accounts established under the Uniform Transfers to Minors Act (UTMA) are titled incorrectly. How should we correct the titling errors?
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Illinois law requires UTMA accounts held by a financial institution to be designated in the name of the person establishing the account, followed by the words “as a custodian for ………….. (name of minor) under the Illinois Uniform Transfers to Minors Act.” Since the accounts in question are not correctly titled, we believe you should…
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When a customer wants to designate an account beneficiary, we use the term “payable on death (POD)” in the title. Is that required? Or should we use “in trust for (ITF)” in the account title?
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Your question appears to be asking about POD accounts, and we are not aware of any specific titling requirements for POD accounts in Illinois law. Under the Illinois POD Act, a POD account is formed when the account holder or holders sign an agreement with the institution providing that on the death of the last…
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Under Illinois law, how should we title an account established under the Uniform Transfers to Minors Act (UTMA)?
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Accounts established under the Illinois UTMA must be designated in the name of the minor’s account custodian followed by the words “as a custodian for ………….. (name of minor) under the Illinois Uniform Transfers to Minors Act.” For resources related to our guidance, please see: Illinois Uniform Transfers to Minors Act, 760 ILCS 20/10(a)(2) (“Custodial…