Topic: Joint Accounts
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Several months ago, we received a non-wage garnishment summons relating to a customer’s ongoing child support obligations. We found a joint account held by the customer with his minor child. We froze the account funds, but the customer recently notified us that the funds really belong to his child, the joint account owner. The customer’s attorney has informed us we should release the funds. Should we continue to freeze those account funds?
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Yes, we believe you should continue to freeze the funds in the joint account until you receive a court order directing your bank to release the freeze on the account or surrender the funds to satisfy the court’s judgment. If your bank releases the account freeze prematurely and your customer withdraws the account’s funds, your…
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Does Illinois law allow a sole proprietorship account to be titled in the name of two spouses? If so, are the spouses co-owners of the account? Can the sole proprietorship account list a payable-on-death (POD) beneficiary?
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We are not aware of any state law 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. The spouses will co-own the sole proprietorship account if they both sign…
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We have a customer who owns a certificate of deposit (CD) jointly with her spouse. If she presents a final divorce judgment with an order awarding her the CD, can we rely on that to remove her spouse’s name from the CD? Or would it be better to have the spouse who was awarded the CD close the account and then open a new one?
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We believe you may rely on a final, non-appealable court order that awards the CD to one of the ex-spouses for either removing the other ex-spouse from the existing CD or closing the CD and opening a new one for the ex-spouse who was awarded the CD. In either case, your bank should retain a…
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Can we rely on a divorce settlement agreement to remove one of the spouse’s names from a joint certificate of deposit (CD)?
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No, we do not recommend relying on a divorce settlement agreement to remove one co-owner of a CD from the account. Generally, divorce settlement agreements must be approved by a court and incorporated into a final judgment. Until there is a final judgment, the terms of a settlement agreement are not binding. For resources related…
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We have a business customer that operates a farm management limited liability company. The company receives lots of checks payable to its clients that it would like to deposit, so the company wants to open a “for the benefit of” (FBO) account for each client. The clients would have no authority on the accounts, and would sign a limited power of attorney giving the company permission to deposit checks made out to them. Is this compliant with Illinois laws? Also, does the designation “FBO” have any bearing on the account itself?
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We are not aware of any Illinois law that expressly relates to the “FBO” designation for deposit accounts. However, this designation is relatively common, and in similar situations, some banks do choose to add the FBO designation to the account title for various reasons. The FBO designation is relevant in determining whether an account is…
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Our deposit agreements do not specify that co-owned accounts are presumed to be joint accounts with the right of survivorship. When an account co-owner dies, do the funds in the account belong to the surviving co-owner?
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In our view, the funds belong to the surviving account owner, provided that the account agreement permitted all account owners to withdraw funds, and the joint account was not established as a convenience account. The Illinois Supreme Court has interpreted the Joint Tenancy Act to require a signed agreement “permitting payment to the survivor” in…
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We have a client who presented a Power of Attorney for a joint account. The agent is not the joint account owner. Do we need to notify the joint account owner before allowing the agent to transact on the account as an agent?
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No, we are not aware of any law requiring you to notify a joint account owner before an agent with a power of attorney transacts on the joint account. Generally, an agent granted a power of attorney over financial institution transactions may exercise control over bank accounts to the same extent as the principal. Consequently,…
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A husband and wife both withdrew cash from their joint deposit account on the same day. Both withdrawals were under $10,000 but totaled over $10,000. We decided to aggregate the withdrawals and file a currency transaction report (CTR) because they were made for the same reason (to pay for a medical procedure for the husband’s mother). Were we right to aggregate the transactions, or should we file an amended CTR?
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We believe it was appropriate to aggregate the transactions. Because both of the withdrawals from the spouses’ joint account benefitted the husband, the CTR filing requirements appear to require aggregation. In general, multiple transactions in a single day should be aggregated when “the financial institution has knowledge that they are by or on behalf of…