Topic: Requests for Financial Information
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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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Our bank received a subpoena requesting all documents “for any checking accounts in which the above named persons, whether jointly or individually or with any other person, may have an interest . . . .” This individual has a personal account and is an authorized signer on three LLC accounts. Are we required to provide information regarding the LLC accounts in addition to the personal account? Also, can we mail the notice of the subpoena to the individual on the same day we mail our subpoena response?
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Based on the information you have provided to us, it appears that the subpoena does not cover the LLC accounts (notwithstanding its overly broad language). Generally, a corporation’s assets are separate from an individual’s assets, even if that individual is an authorized signer on the LLC accounts. In our view, you are not required to…
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We received a non-wage garnishment order naming both John and Jane Doe as judgment debtors. Their only account at our bank is a revocable living trust account (titled “The John and Jane Doe Living Trust”), for which they are both named as trustees. They created the trust and are its only two beneficiaries. The garnishment is not for child support obligations. Is the trust account subject to the garnishment order?
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Yes, we believe the trust account is subject to the garnishment order. Under Illinois law, a debtor’s interest in trust funds is subject to garnishment, provided that the trust was self-settled — that is, created by the debtor himself for his own benefit. In this case, you have indicated that the debtors established their trust…
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We received a child support levy for a customer. The customer’s only account with the bank is a health savings account (HSA). Are HSA accounts exempt from child support levies? How should we report this transaction to the IRS?
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We are not aware of any laws or regulations that would exempt a health savings account (HSA) from a child support levy. However, while there may be no law preventing the levy on the HSA account, we believe you should report any disbursements from the account resulting from the levy as “prohibited transactions” — it…
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Our local police department called us to request a customer’s financial records. What do we need to receive from the police before disclosing those records?
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We recommend requesting that the police department produce a subpoena or court order for the disclosure of your customer’s financial records. In general (there are several exceptions which do not appear to apply here), federal law and the Illinois Banking Act authorize you to furnish a customer’s financial records to a third party, including a…
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We received a subpoena from the Illinois Department of Human Services. It requests documents about a particular customer, using his social security number. Ordinarily, the subpoenas that we receive include an authorization from the local circuit court. Should we respond to this subpoena, or should we request further documentation before responding?
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We recommend obtaining more information before responding to the subpoena. The Department of Human Services Act expressly grants subpoena powers to the Inspector General (the office that investigates allegations of abuse, neglect or financial exploitation). The Act does not require subpoenas to be authorized by a county court. However, in this case, the subpoena does…
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We recently received an IRS levy, which asked us to freeze the property of an individual who serves as a trustee for a trust account. The trust is a revocable trust, and the trust account uses the individual’s social security number. The scope of the levy covers property and rights to property, such as deposits. Should the bank report and freeze the revocable trust deposit account?
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No, the bank should not report and freeze the revocable trust deposit account, provided that the trustee is not the grantor or a beneficiary of the revocable trust. A federal tax levy attaches to all property or “rights to property” of a delinquent taxpayer. State law determines whether a person has a right to property,…
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We currently have funds sitting in a separate, non-wage garnishment account. Since we received the garnishment notice, back in 2002, we have never received a turnover order, the customer has closed all of its accounts, and as far as we know, the creditor no longer exists. How long should we maintain the garnishment account?
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We believe your institution should have reported the segregated garnishment funds to the Illinois State Treasurer as unclaimed property after five years of inactivity, and since it has not, it should do so now. Two different Illinois laws appear to be in conflict here, but we think the stronger argument is that you should comply…
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How long are we required to retain deposit account statements and checks? The bank has been served with a subpoena that asks for documents all the way back to 2003.
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While we do not know the specifics of the subpoena that your bank received, it is likely that the subpoena requires the bank to produce any relevant documents in its possession or control, regardless of whether the bank has retained the documents beyond any required retention period. If the subpoena requests documents that are not…