Topic: Minor Accounts
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For our UTMA accounts, we always disclosed that the accounts would convert to ordinary savings accounts when the beneficiary reaches the age of majority, with “applicable charges” applying after the conversion. However, our original account disclosures for the UTMA accounts do not specify what charges will apply after the conversion to a savings account. Should we send new disclosures to the UTMA account beneficiaries after converting their accounts to savings accounts?
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Yes, we recommend treating the conversion to a savings account as a new account opening, requiring new disclosures and a new account agreement. Regulation DD requires savings account disclosures to include “the amount of any fee that may be imposed . . . and the conditions under which the fee may be imposed.” Simply stating…
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We sometimes have customers who want to add an older teenager who is a minor to an account. Can a minor have joint ownership in a joint account, such as with a parent? Could the bank exercise a right of setoff in the parent’s other accounts for the minor’s overdrafts on the joint account? What identification should we require from the minor establishing a joint account with their parent?
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Yes, a minor can hold an account in joint ownership with another party, such as a parent. The Illinois Banking Act permits banks to open accounts for minors, “and the rules and regulations of such bank . . . shall be as binding upon such minor as if such minor were of full age and…
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If our bank is the custodian for a Uniform Transfers to Minors Act (UTMA) account, is it our responsibility to contact the beneficiary when coming of age? Also, if the beneficiary is unaware of the account, can we disclose the source of the funds (such as a grandparent)?
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Yes, we recommend notifying the beneficiaries of UTMA accounts when they reach the age of majority. As the custodian for a UTMA account, your bank is responsible for transferring property to the beneficiaries after they reach the applicable age of majority. The UTMA requires custodians to “transfer in an appropriate manner the custodial property .…
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We typically allow parents to open joint accounts with their minor children by having the parent sign the account agreement for both the child and the parent. Does the parent’s signature on behalf of the child create a right of survivorship for the child under the Joint Tenancy Act?
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We cannot confirm that a parent’s signature on behalf of a minor child would create a right of survivorship. Under the Joint Tenancy Act, a right of survivorship in a joint deposit account may be established only when all account owners sign an agreement to that effect. It is conceivable that a court would view…
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A 16 year-old minor has a joint savings account with her father. She would like to remove her father from this account and add her mother. Is the father’s permission required? We believe that an adult could make this account change, but we are uncertain about minors.
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We recommend obtaining the father’s permission as a joint account owner before removing him from the account. The Illinois Banking Act states that banks may accept deposits from minors and open accounts in the name of minors, and the bank’s rules and regulations are the same as for accounts held by adults. However, there is…
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A grandma opened an account with her minor grandchild. The account agreement creates a joint account with a right of survivorship. However, the child did not sign the account agreement. The grandma signed in her own name and on behalf of the child. We used both the child’s social security number and the grandma’s to open the account. We do not have any evidence or documentation that the grandma is the child’s legal guardian. The child never has transacted on the account, and the grandma has passed away. Is this account now part of the grandma’s estate?
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We recommend consulting with bank counsel regarding the ownership of the account, but in our view, a joint tenancy never was created, so the account passed to the estate of the grandma upon her death. The Illinois Banking Act permits banks to establish deposit accounts for minors with the same terms as if the minor…
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Our accounts established under the Uniform Transfers to Minors Act (UTMA) are titled incorrectly. How should we correct the titling errors?
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Illinois law requires UTMA accounts held by a financial institution to be designated in the name of the person establishing the account, followed by the words “as a custodian for ………….. (name of minor) under the Illinois Uniform Transfers to Minors Act.” Since the accounts in question are not correctly titled, we believe you should…
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Under Illinois law, how should we title an account established under the Uniform Transfers to Minors Act (UTMA)?
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Accounts established under the Illinois UTMA must be designated in the name of the minor’s account custodian followed by the words “as a custodian for ………….. (name of minor) under the Illinois Uniform Transfers to Minors Act.” For resources related to our guidance, please see: Illinois Uniform Transfers to Minors Act, 760 ILCS 20/10(a)(2) (“Custodial…
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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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Are there any Illinois laws or cases that automatically would hold a parent liable for a child’s debts, such as deposit account charges for overdrafts or account fees? Currently, our procedures require a parent to sign the agreement for a minor’s deposit account and to take responsibility for overdrafts and fees, with an exception for accounts in Illinois due to Section 45.1 of the Illinois Banking Act. I’m not sure if that exception is appropriate.
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No, we are not aware of an Illinois law or case that would generally hold a parent liable for a child’s debts. A parent in Illinois may be held liable up to a limited amount for a child’s debts in cases of the child’s willful or malicious acts, provided that the child is between 11…