Topic: Authorized Signers
-
We have some business customers whose employees deposit cash together with checks and then ask for cash back from the entire deposit. These employees are not authorized signers on the accounts, but we know that they handle some of their employers’ accounting. Should we give them cash back on a cash deposit? Would the bank be liable if the employees are dishonest and keep the cash back from their employers’ deposits?
Although we cannot provide legal advice, we believe that the providing cash back to these individuals could be viewed as permitting unauthorized withdrawals for which your bank would be liable. Under the Uniform Commercial Code (UCC), a bank is liable for unauthorized withdrawals from a customer’s account. A withdrawal is considered unauthorized if it violates…
-
One of our customers opened a deposit account for a trust under a Power of Attorney document. He frequently is out of town and would like to appoint an authorized signer to sign checks in his place. In the alternative, he would like to add the authorized signer as a joint owner on the account. Is that permissible? The Power of Attorney document gives him the power to “open new accounts,” among other powers.
Yes, an agent under a power of attorney generally may appoint an authorized signer for a deposit account, unless the power of attorney document prohibits the appointment. The Illinois statutory power of attorney form states that an agent “will have authority to employ other persons as necessary to enable the agent to properly exercise the…
-
We have an LLC account that is owned by a trust. The account has two signers, who are trustees of the trust. Do we need to list the signers as trustees or is it sufficient to list them as authorized signers?
We believe it is sufficient to list the two trustees as authorized signers for the LLC’s account, since that accurately defines their roles with regard to the account (provided that you have obtained a resolution from the LLC authorizing those individuals to act as signatories for the LLC). The fact that the two individuals also…
-
We have a deposit account for a trust that originally had two co-trustees. One of the co-trustees recently died. The trust agreement appears to provide for a successor trustee for the co-trustee who died, but it’s not clear. Should we add that individual as an authorized signer on the account? Should we use a Certification of Trust form?
You should use a Certification of Trust form, and you should not add an individual as an authorized signer on the trust account until you obtain this form from the existing trustee. Your bank should not attempt to interpret trust instruments, which, as you point out, can be unclear. Under Illinois law, you are required…
-
We have a checking account for a member-managed LLC. Can members who are not authorized signers access the account?
The answer depends on your account agreement, as well as the LLC’s operating agreement. Your account agreement with the LLC should include provisions regarding which individuals may access the account. In addition, the LLC’s operating agreement (or corporate resolution) should identify which members are authorized to exert control over the business’ accounts. In general, every…
-
We have a single-member LLC that would like to add an authorized signer, who is the sole member’s spouse. Can we do that? How would the account transfer on the death of the LLC sole member?
Yes, an LLC may establish an authorized signer for its account. We recommend following your bank’s procedures for adding an authorized signer to a business account (which should include obtaining a resolution from the LLC authorizing that individual to act as a signatory for the LLC). The LLC’s articles of organization may specify how the…
-
Can a safe deposit box in Illinois have a payable on death (POD) beneficiary or authorized signer? Can a power of attorney document identify a deputy or authorized signer, and are those the same thing? Can you provide any other information on opening safe deposit box accounts?
No, we do not believe it is possible to add a POD beneficiary to a safety deposit box. The definition of “account” in the Illinois Trust and Payable on Death Accounts Act does not include safety deposit boxes. However, customers could elect to lease their boxes jointly, which might achieve the same goal as adding…
-
A business customer wants to remove its current authorized signer. We asked that the new authorized signer sign a signature card, but the authorized signer refused. Are we required to obtain the new authorized signer’s signature on a signature card?
Yes, we strongly recommend obtaining the authorized signer’s signature before permitting the authorized signer to take any action with regard to the account. Signature cards for authorized signers help tellers and other staff confirm an authorized signer’s signature, and they also may serve to define and limit an authorized signer’s authority. Without an appropriate signature…
-
A husband and wife co-own a sole proprietorship. The account for the sole proprietorship is currently titled “John Doe, doing business as The Doe Family Business.” The couple would like to make sure that the wife can continue to use the account if the husband passes away. The wife is already an authorized signer, but should we also add her name to the account title? If we change the title, do we need to close the existing account and open a new one?
We recommend closing the current account and opening a new account with both spouses included in the title. An authorized signer’s privileges are only valid while the account owner is alive. In contrast, a joint account owner has the right to continue using the account after the death of a co-owner, provided the parties agreed…
-
Our bank received a court order that would appear to require us to freeze all of a customer’s accounts with us. The order requires any “financial institution … maintaining or having custody or control of any account or other asset of [our customer] or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by [our customer]” to freeze all “assets, funds, documents, or other property held by, or under its control . . . that are subject to access or use by, or under the signatory power of [our customer].” This customer has several accounts at our bank for businesses that we know he owns or manages, and for which he is an authorized signer. Should we freeze those accounts?
Whether a court order applies to accounts held at your bank depends on the precise language of the order. In this case, the order is very specific. It applies to “any account or other asset of [your customer] or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by” your customer.…