Posted by: Graham B. Schmidt
Many people struggle with how to plan for their own, or their loved ones’, potential disability. Independent senior citizens would often like to establish a way for a trusted relative or friend to have access to the senior’s checking account, but only a conditional access that allows for writing checks in case of the senior’s disability. The goal is to permit the trusted friend or relative to pay the mortgage, hospital bills, and living expenses without giving him or her the legal right to inherit the money contained in the checking account.
On August 4, 2009, responding to the public demand for a proper way to construct a “convenience” checking account, the Illinois legislature passed the “Banking Convenience Account for Depositors Act” (Act). The Act provides a solution to this problem, albeit a temporary one, since the Act will sunset on December 31, 2015.
Under the Act, any bank conducting operations with Illinois residents is authorized, but not required, to offer a formal “convenience deposit account.” This new form of deposit account is created by a primary account holder, and all assets ever held by the deposit account are the sole property of the primary account holder. The primary account holder can then authorize a second person, the "convenience depositor", to write checks and withdraw funds. Convenience Accounts are titled in the name of both the primary depositor and the secondary convenience depositor, but the primary account holder can terminate the second party’s authority to make deposits or withdrawals at any time. Upon the death of the primary account holder, the funds of the deposit account become the property of the primary account holder’s estate, and the convenience depositor has no right of survivorship.
Unfortunately, no state or federal bank doing business in Illinois currently offers these new Convenience Accounts to their customers, and the experience of other states suggests that not many banks decide to offer the accounts. Illinois is not the first state to approve of multiparty bank accounts without rights of survivorship. This author’s research of both the Texas Probate Act and Florida Statute §655.80 do not show any reported cases regarding statutory convenience accounts, even though both states have authorized statutory convenience accounts since 1992.
If you are interested in creating a Convenient Account, you should ask your bank if it offers such an account. Hopefully, at least one institution will offer Convenience accounts to Illinois residents within the five year lifespan of the Act.
If you are interested in learning more about this new estate
planning tool, please follow this link to my article on
Convenience Accounts published within the
