Topic: Payable on Death Accounts
-
We have a customer with a power of attorney over his father’s individual checking account. The account is not a payable on death (POD), but the son would like to convert it to one. We have a copy of the father’s will, which indicates that his four children will receive his estate in equal shares. Can we allow the son with power of attorney to add POD beneficiaries to his father’s account? If so, do we need to require that he add all four children, in light of the will’s directives?
—
by
The answer depends on the specific language in the power of attorney document. Generally, an agent acting under a power of attorney does not have the authority to add or change account beneficiaries without an express grant of authority to do so (which would be identified in Section 3 of the statutory short form power…
-
We have a payable on death (POD) account for which the owner died almost five years ago. The owner’s daughter was named as the POD beneficiary. The daughter lives in a nursing home and has not been able to sign a new signature card confirming that she is the account owner. She has not made any transactions on the account and does not hold any other accounts at our bank. Do we need to report the account as abandoned property, since there has not been any activity on the account since the date of the original owner’s death?
—
by
It depends. You are not required to report the POD account as unclaimed property to the Illinois Treasurer provided that your bank creates and maintains documentation confirming the account owner’s indication of interest in the account. The current Illinois unclaimed property law does not treat an account as abandoned if the owner has “indicated an…
-
Are contingent beneficiaries allowed on payable on death (POD) accounts in Illinois? Since the Illinois Trust and Payable on Death Accounts Act does not provide for contingent beneficiaries, does this mean that they are not allowed under Illinois law?
—
by
We believe that a POD account can provide for contingent beneficiaries, if this intent is made clear in the account agreement with your customer. In general, the Illinois Trust and Payable on Death Accounts Act (“POD Act”) requires that POD accounts be equally distributed to beneficiaries on the death of the last surviving accountholder, but…
-
We have a customer who would like to name a trust as the payable on death (POD) beneficiary on her individual certificate of deposit (CD). Does Illinois law allow this?
—
by
Yes, a trust may be added as a beneficiary to a CD account. Under Illinois law, an account becomes a “payable on death” account when the accountholder signs an agreement providing that on the accountholder’s death, the account will be paid to or held by a designated beneficiary. The law defines the term “account” to…
-
We title certificate of deposit (CD) accounts that have a payable on death (POD) beneficiary with the word “trustee” next to the owner’s name. Do we have to do this? When we pay out such accounts, it causes problems to issue checks to a “trustee” when there is no formal trust.
—
by
No, we do not recommend including the words “trustee” or “trust” in a POD account title. We are not aware of any specific titling requirements for POD accounts in Illinois law. However, POD accounts are separate and distinct from trust accounts, and the term “trustee” implies the existence of a trust relationship. For resources related to our guidance,…
-
We have a payable on death (POD) account with four adult beneficiaries. After the account owner died, but before we could distribute the account funds, one of the beneficiaries died. The surviving beneficiaries are insisting that we split the account balance among them, without paying a portion to the estate of the deceased beneficiary. Is that right? Our account agreement expressly provides that the POD beneficiaries take as tenants in common.
—
by
We believe that the POD account funds should be split four ways among the named beneficiaries who were living when the account owner died, including the deceased beneficiary. The Illinois Trust and Payable on Death Accounts Act (“POD Act”) requires depository institutions to distribute POD account funds to beneficiaries as tenants in common with equal…
-
Do you see any privacy or other issues with providing payable on death (POD) account beneficiaries with a list of all beneficiaries, and the amounts designated to each beneficiary, after the account owner has died?
—
by
We believe that at least one exception in Regulation P would permit this disclosure, and we are not aware of any other prohibitions or risks involved in revealing this information after the account owner has died. Regulation P permits banks to disclose account information to “persons holding a legal or beneficial interest relating to the…
-
One of our certificate of deposit (CD) account customers died seven years ago. The CD was payable on death (POD) to her grandson. However, the signature card for the CD stipulates that it is not to be paid out until he turns twenty-one, and he has not yet turned twenty-one. Can we swap out the deceased customer’s social security number for the grandson’s social security number? The beneficiary’s mother now is demanding that we release the CD funds to her, and the executor would like to close the customer’s estate.
—
by
Simply replacing the original accountholder’s social security number with the beneficiary’s social security number would not fulfill your customer’s intent, which was to wait until the beneficiary turns twenty-one before distributing the CD's proceeds. In general, the Illinois Trust and Payable on Death Accounts Act (“POD Act”) requires that POD accounts be distributed to beneficiaries…
-
When a customer wants to designate an account beneficiary, we use the term “payable on death (POD)” in the title. Is that required? Or should we use “in trust for (ITF)” in the account title?
—
by
Your question appears to be asking about POD accounts, and we are not aware of any specific titling requirements for POD accounts in Illinois law. Under the Illinois POD Act, a POD account is formed when the account holder or holders sign an agreement with the institution providing that on the death of the last…
-
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?
—
by
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…