Topic: Minor Accounts
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Is an account considered to be a minor account in Illinois if it is jointly owned by a legal guardian or parent over the age of majority? If it is not considered a minor account, can it be used for set off, overdraft privileges, and more? Also, is the age of majority in Illinois age 18 or age 16?
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We believe that you may treat an account that is jointly owned by a minor and an adult as you would any other account — including by enforcing your right of setoff, overdraft privileges, and other items addressed in the account agreement. The Illinois Joint Tenancy Act does not prevent a minor from jointly owning…
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We offer two savings accounts that function in the same way; one is an Illinois Uniform Transfers to Minors Act (UTMA) account and the other is a minor savings account. If we mistakenly opened an Illinois UTMA account as a minor account, or vice versa, should we provide new disclosures before correcting the account names in our system? Also, would the escheatment rules for savings accounts apply, or the escheatment rules for UTMA accounts, when the title of the account doesn’t accurately describe the account — for example, if the title on an account reads “as Custodian Under ILUTMA,” but the ownership was incorrectly listed as “joint”?
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We recommend providing new account disclosures when changing an account name to add or remove a reference to the Illinois UTMA. A reference to the Illinois UTMA in an account name implies that the account is a custodial account subject to the Illinois UTMA’s requirements for custodians, rather than a savings account that is owned…
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A recently deceased customer owned a joint account with their minor child, aged sixteen. As a joint owner with the right of survivorship, does the minor child have ownership of the account and the funds? We are a federal savings bank.
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Yes, we believe that the minor child would have ownership over the account and the funds, provided that both the parent and the child signed the original joint account agreement. The Illinois Joint Tenancy Act provides that a right of survivorship is created when all joint account owners sign an agreement to that effect, and…
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If a minor opens a demand deposit account in Illinois and then moves out of state, is the account still governed by the Illinois Banking Act — regardless of where the minor lives? Our deposit account agreements provide that they are governed by Illinois law.
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While we cannot address all possible scenarios in fifty different states, we believe that in most circumstances, a minor account opened in Illinois under a deposit account agreement stating that the account is governed by Illinois law would remain subject to the Illinois Banking Act’s provisions, even if the minor moves out of state after…
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If we require minors to reach a certain age before we allow them to open a demand deposit account as a single owner, could we face any discrimination claims?
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No, we do not believe your bank would be subject to discrimination claims if you set a minimum age for minors to open an individual account, although we do recommend that you apply such a policy consistently. Generally, prohibitions of discrimination apply only to loan products, and, in that context, discrimination against an applicant based…
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How should we distribute the funds in an account belonging to a deceased customer whose sole payable on death (POD) beneficiary is their thirteen-year-old minor child? The account balance is less than $500. The customer was divorced from the minor child’s other parent. What documentation does the surviving parent need to show guardianship?
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We believe that you may deliver the funds in your deceased customer’s account to the minor beneficiary’s surviving parent if they provide the bank with an affidavit signed by the surviving parent stating that (1) the minor’s estate does not exceed $10,000, (2) no representative has been appointed for the minor’s estate, and (3) the…
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A customer opened a joint account with her daughter, who is younger than one year old. The mother signed the account agreement on behalf of her child as “child’s name by mother’s name, mother.” Is it permissible for a minor to be added as a joint owner on an account with a right of survivorship when the child to too young to sign their name? Does the child technically have transaction authority on the account? Is the account FDIC insured?
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The Illinois Banking Act permits banks to establish deposit accounts for minors with the same terms as if the minor is an adult. However, it is not clear under Illinois law whether a parent’s signature on behalf of a minor would be binding to create a joint tenancy with a right of survivorship for an…
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A customer brought a check to our bank for deposit that was payable to “Jane, as custodian for her minor son, John, until age 21.” Jane requested that the check be deposited into her personal account, and she endorsed the check with her name. Jane does not have a custodial account at our bank, and John does not have a deposit account. Also, John is 22 years old. Should we have deposited the check, or should we have requested that the customer obtain a replacement check from the drawer?
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We believe that your bank should have asked the customer to obtain a replacement check from the drawer in this scenario. Under the Uniform Commercial Code, your bank warranted that there were no missing indorsements when it forwarded the check to the payor bank for payment. The same presentment warranty also applied when your customer…