Topic: Death of a Customer
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Can we require a person who has presented a small estate affidavit to present letters of office before they close out a deceased customer’s account?
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No, we do not believe that you can require letters of office when presented with a small estate to close a deceased customer’s account. The Illinois Probate Act requires a financial institution to comply with a small estate affidavit that is in substantially the same form outlined in the Act. The statutory form for the…
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We have a customer with a power of attorney over his father’s individual checking account. The account is not a payable on death (POD), but the son would like to convert it to one. We have a copy of the father’s will, which indicates that his four children will receive his estate in equal shares. Can we allow the son with power of attorney to add POD beneficiaries to his father’s account? If so, do we need to require that he add all four children, in light of the will’s directives?
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The answer depends on the specific language in the power of attorney document. Generally, an agent acting under a power of attorney does not have the authority to add or change account beneficiaries without an express grant of authority to do so (which would be identified in Section 3 of the statutory short form power…
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A customer passed away several months ago. She held a joint account with her son and also has an outstanding unsecured loan (not a credit card debt). Can we use the funds in the joint account to setoff the loan? Our loan agreement states that “all obligations of the Undersigned shall be binding upon Undersigned’s heirs, personal representatives, successors and assigns.” Our deposit account agreement permits us to “set-off funds in your account, held by you, jointly or individually to pay any debt you may owe us.”
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We believe that your bank may exercise a valid right of setoff in the joint account funds, even after the joint owner has died. Under Illinois law, the right of setoff can arise either contractually (when a loan agreement or account agreement provides for a right of setoff) or under common law when there is…
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If we are removing a joint owner from a joint account because that individual has died, can we rely on a newspaper obituary as confirmation of their death? We don’t always have a copy of a death certificate. Also, if the deceased joint owner was the primary account holder for tax reporting purposes, should we begin reporting taxes to the surviving owner as the primary account holder?
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Yes, we believe that your bank may rely on a newspaper obituary, although we recommend checking with the living joint owner to confirm that the obituary refers to the deceased joint owner and not to someone else with the same name. We think you should treat the surviving joint owner as the primary account holder…
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Do we need to require court documents (such as letters of office) when the affiant on a small estate affidavit wants to open an estate account? The customer has the will and death certificate but has not been appointed executor.
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No, letters of office are not necessary to open an account for a small estate. The affiant of a small estate affidavit may act as the estate’s executor and open an account for the estate on the basis of the affidavit — provided that neither the affiant nor anyone else has requested or received letters…
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Can a customer use a small estate affidavit for his mother’s estate (which is well under $100,000) if his mother resided and died in Missouri? She left a will and was survived by three children. Also, does our customer have to be named as the executor of her will in order to serve as affiant on the small estate affidavit?
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Yes, we believe that an Illinois small estate affidavit can be used in Illinois even when the deceased was not an Illinois resident. Also, Illinois law does not require that the affiant for a small estate affidavit be an executor of the deceased individual’s will. When your bank makes distributions of property in accordance with…
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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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We have a payable on death (POD) account for which the owner died almost five years ago. The owner’s daughter was named as the POD beneficiary. The daughter lives in a nursing home and has not been able to sign a new signature card confirming that she is the account owner. She has not made any transactions on the account and does not hold any other accounts at our bank. Do we need to report the account as abandoned property, since there has not been any activity on the account since the date of the original owner’s death?
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It depends. You are not required to report the POD account as unclaimed property to the Illinois Treasurer provided that your bank creates and maintains documentation confirming the account owner’s indication of interest in the account. The current Illinois unclaimed property law does not treat an account as abandoned if the owner has “indicated an…
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Are contingent beneficiaries allowed on payable on death (POD) accounts in Illinois? Since the Illinois Trust and Payable on Death Accounts Act does not provide for contingent beneficiaries, does this mean that they are not allowed under Illinois law?
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We believe that a POD account can provide for contingent beneficiaries, if this intent is made clear in the account agreement with your customer. In general, the Illinois Trust and Payable on Death Accounts Act (“POD Act”) requires that POD accounts be equally distributed to beneficiaries on the death of the last surviving accountholder, but…