Topic: Minor Accounts
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Are there any risks to permitting a child under the age of five, who cannot sign his or her own name, as an owner on a savings account? We also have parents sign as co-owners.
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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, we do not recommend establishing an individual deposit account for a minor who is too young to physically sign the account agreement. Regarding joint accounts with parents, we note that simply adding…
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At what age should we permit minors to establish their own accounts? If the minor is too young to sign the account agreement, what type of account can we offer them? Can the minor be added to an adult’s account?
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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, we do not recommend establishing an individual deposit account for a minor who is too young to physically sign the account agreement. If a minor is too young to physically sign…
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What needs to be in the title of a minor account? Does every minor account need a custodian?
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The title requirement depends on the type of account. One type of custodial account for a minor is established under the Uniform Transfers to Minors Act (UTMA). Such accounts 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…
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We have a custodial account for which the beneficiary was a minor but now is well over the age of majority. Our attempts to reach the custodian, who lives in a foreign country, have been unsuccessful. Should we transfer the account to the beneficiary without the custodian’s consent?
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The answer to your question likely will depend on the provisions in your account agreement. If the account is covered by the Uniform Transfers to Minors Act (UTMA), the title of the account should state the custodian’s name, with the designation “as custodian for ……… (name of minor) under the Illinois Uniform Transfers to Minors…
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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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Can an older sister be the custodian on a Uniform Transfers to Minors Act (UTMA) account?
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Yes, a minor’s sibling may be an UTMA custodian, provided that the sibling is at least 21 years old or was the transferor of the account funds to the minor. For money held in a deposit account, the UTMA custodian either must be: (1) the transferor, (2) an adult other than the transferor (defined as…
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We made a vehicle loan to a minor, who is the sole owner of the vehicle. We required a co-borrower due to the minor’s age. However, can we use the vehicle title as collateral, and will that be binding?
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Yes, you can use the vehicle as collateral, but be aware that the minor’s age adds some risk that the security agreement could be challenged — at least until the minor reaches the age of eighteen and ratifies the security agreement. In Illinois, the general rule is that an agreement with a minor is voidable…
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If the custodian of an UTMA account passes away and there is no designated successor custodian, does the surviving parent automatically become the successor custodian?
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No. The Uniform Transfers to Minors Act (UTMA) does not provide for the automatic designation of a surviving parent as the account custodian. If the minor is age fourteen or older, the minor can designate the surviving parent as the successor custodian, but if the minor is under age fourteen, a court must designate the…
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A Uniform Transfers to Minors Act (UTMA) account beneficiary has reached the age of 21 and wants to cash a check that is payable to the custodian (“to Sue Doe, custodian for John Doe”). Do we need the custodian to endorse the check before cashing it?
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We believe you should require the custodian of the UTMA account to endorse the check before cashing it. In addition, you should contact and remind the custodian that the custodian now has an affirmative duty under the UTMA to transfer the account to its beneficiary, since he or she has reached the requisite age or…