Topic: Payable on Death Accounts
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We have an account holder who passed away and had a payable-on-death account. He had several beneficiaries, and we are wondering if the beneficiaries are entitled to the last three months of statements while the account holder was alive.
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The Illinois Trust and Payable on Death Accounts Act (Act) only addresses the authority for financial institutions to distribute the proceeds of a payable-on-death (P.O.D.) account upon the owner’s death and is silent on whether the institution may distribute account statements that were issued when the account owner was alive. As explained below, however, you may…
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Are there any Illinois laws that would prevent a sole proprietorship account holder from naming a payable-on-death beneficiary?
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If a sole proprietorship owns a deposit account, we don’t believe that the Illinois Trust and Payable on Death Accounts Act would prevent the owner from designating a payable-on-death beneficiary. The law allows account owners to designate payable-on-death beneficiaries for any “account,” defined as “any account, deposit, certificate of deposit, withdrawable capital account or credit…
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One of our customers died, leaving one CD held in joint tenancy and one CD with a payable on death beneficiary. The joint tenant and POD beneficiary want us to pay the CD funds out to a family business instead of paying the beneficiaries directly. Is that permissible?
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We believe that it would be a best practice to pay the certificate of deposit (CD) funds directly to the beneficiaries of the accounts, instead of distributing the funds to a business entity that is not a beneficiary or owner of the accounts. Distributing CD funds directly to the account beneficiaries will create a clean…
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Are payable on death beneficiaries permissible on an account owned by a sole proprietorship?
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We do not see any problem with a sole proprietorship establishing a payable on death (POD) account. Under the Illinois Trust and Payable on Death Accounts Act, a POD account is created when “one or more persons opening or holding an account sign an agreement with the institution providing that on the death of the…
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Can a sole proprietorship account have a payable on death (POD) designation?
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If a sole proprietorship holds a deposit account, we are not aware of any provisions in the Illinois Trust and Payable on Death Accounts Act that would prevent the owner(s) from designating a payable-on-death beneficiary. The law allows account owners to designate payable-on-death beneficiaries for any “account,” defined as “any account, deposit, certificate of deposit,…
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Can a bank employee be named as the beneficiary on a customer’s payable-on-death account, if the customer had no prior relationship with the employee?
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We are not aware of any restrictions on who is named beneficiary of a payable on death account under the Illinois Trust and Payable on Death Accounts Act. With that said, we strongly advise against allowing employees to name themselves as beneficiaries on customer payable-on-death accounts (with exceptions only for family relationships). If a customer…
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Are we required to collect social security numbers and addresses of the beneficiaries on payable on death accounts?
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We agree that the Customer Identification Program (CIP) regulations do not require you to obtain the social security number of payable on death (POD) beneficiaries. Under those rules, your CIP procedures must (at a minimum) collect and verify certain identifying information about your customers, including taxpayer identification numbers. 31 CFR 1020.220(a)(2). However, the term “customer”…
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Can a customer name a payable on death (POD) beneficiary on a safe deposit box?
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We do not believe it is possible to make a safety deposit box payable on death. Payable on death accounts are authorized by the Illinois Trust and Payable on Death Accounts Act. That law defines “account” to include “any account, deposit, certificate of deposit, withdrawable capital account or credit union share.” 205 ILCS 625/2(b). A…
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Can the beneficiary of a payable on death (POD) account be a trust?
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Yes, a trust can be the beneficiary of a payable on death account. The Illinois Trust and Payable on Death Accounts Act was amended in 2010 to define the term “beneficiary.” Public Act 96-1151. As defined in the act, the term “beneficiary” includes a trust, among other entities. 205 ILCS 625/2.
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On a CD held in a Totten Trust with three beneficiaries, if one of the beneficiaries dies and then the accountholder passes, does the money get divided between the two living beneficiaries or to the two living beneficiaries and the estate of the deceased beneficiary?
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Under the Illinois Trust and Payable on Death Accounts Act, upon the death of the last surviving trustee, the person designated as the beneficiary who is then living is sole holder of the account, unless more than one beneficiary is named and then living. If more than one beneficiary is named and then living, then the beneficiaries hold the…