Topic: Joint Accounts
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A mother and daughter own an account as joint tenants. A third person (the daughter’s husband) recently presented us with a court order naming him as guardian for the mother, and we added him to the account. Is there any reason to remove the daughter from the account?
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No, the daughter should remain on the account, unless there are other facts that would require her removal. The guardian for the mother steps into the mother’s shoes as one of the joint tenants on the account, but that would not affect the daughter’s ownership interest in the account. For resources related to our guidance,…
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For a joint deposit account, should we be accepting a form reporting an unauthorized ACH debit from just one of the joint owners? For example, it doesn’t seem logical to return an ACH as unauthorized unless all owners are willing to attest that the charge was unauthorized.
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Yes, you may accept a “written statement of unauthorized debit” (WSUD) from a joint account holder without the other joint account holder’s signature. Under the NACHA rules, the “Receiver” must sign the WSUD. Because the term “Receiver” is defined to include “all Persons whose signatures are required to withdraw funds from an account,” and either…
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A customer has applied for a car loan, and he wants his grandson, who is a minor, to cosign the loan. Both are named on the car title. Our loan agreement provides that both debtors are jointly and severally liable for the loan amount. Will the minor’s signature be binding? Is the loan agreement void because one of the debtors is a minor? What if all payments are made by the grandfather only?
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No, the minor’s signature will not be binding on the loan agreement or the security agreement until the minor reaches the age of eighteen and ratifies the agreements. However, the loan agreement will not be void, as the grandfather’s signature is binding, and you have told us that he is liable for the entire loan…
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What should we do when we receive a returned statement for an individually or jointly held deposit account marked “deceased” by the post office?
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For both jointly and individually held deposit accounts, we recommend discontinuing the mailing of account statements to the address that was marked “deceased.” Individual Accounts Once you have received notice of the customer’s death, you should hold onto any subsequent account statements until an an executor, administrator, trustee or other appropriate representative of the deceased…
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Are we required to notify each account owner on a joint account when there is a change in the method or location of the statement delivery? For example, what if a joint account owner signs up for e-statements without the other account owner’s knowledge?
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No, we do not believe it is necessary to notify account holders who are not receiving periodic statements about changes in the delivery method or location. Regulation E (for electronic fund transfer accounts), Regulation DD (for savings accounts) and Regulation Z (for open-end credit) permit you to provide periodic statements to only one of the…
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When we become aware of the death of a primary owner of a joint deposit account, what is the best practice in regard to the mailing of statements on the account? What if there is no joint owner?
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We recommend that joint account statements be mailed only to the surviving account holder after the death of a joint account holder. Due to privacy concerns, we do not recommend mailing statements to the deceased joint account holder’s address if it is different than the surviving account holder’s address, as this could risk exposing the…
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Can we set up a joint checking account owned by two businesses? Should we get Employer Identification Numbers (EIN) from both businesses?
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We are not aware of any laws or regulations that would prevent you from opening a joint checking account owned by two businesses. The Illinois Joint Tenancy Act provides that two or more persons may enter into a joint deposit account. 765 ILCS 1005/2(a). The Illinois Statute on Statutes defines the term “person” to include…
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Does Illinois law authorize the use of “for the benefit of” (“FBO”) accounts?
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We are not aware of any Illinois law that expressly refers to an FBO account. However, Illinois does have a statute — enacted in 2009 — that expressly authorizes banks to offer “convenience accounts,” which appear to be comparable to FBO accounts. Our description of this law, presented at our annual IBA Bank Counsel Conference…
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We have two customers, husband and wife, who have requested a joint account to be owned jointly by both of their separate revocable trusts. Would that be possible or advisable?
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It may be possible to combine funds from two separate revocable trusts into one account, but it is not advisable. Because the account holding the trust funds would be held by both trusts in joint tenancy, each trust would have rights of survivorship in the account. Joint Tenancy Act, 765 ILCS 1005/2. However, the trust…