New Convenience Bank Accounts Are Alternative To Joint Tenancy
A new law in Illinois allows a financial institution to offer a new "convenience account" which would be opened in the name of a depositor and a "convenience depositor.
" These accounts are intended for those who may need assistance with banking.
For example, a parent needing assistance with banking could add a child to the account as a "convenience depositor.
" The child would be able to make deposits and the bank could pay out to either the parent or the child for the convenience of the parent.
The ownership of the deposits would be in the name of the parent, and the parent's social security number would be used.
The funds would not be considered as given one-half to the child, and the child would not receive the account as a survivor upon the parent's death.
The new convenience account can be an effective alternative to opening a joint tenancy account in the name of the parent and the child.
There are some problems with the common use of a joint tenancy account in this type of situation.
Under some circumstances, the child can be considered to have received a gift of one-half of the joint tenancy account.
This could cause the joint tenancy account to be subject to creditors of the child.
Such a gift, if over $13,000.
00 per person in a single year (reflecting the 2011 limit) would require the filing of a gift tax return.
Also, the child could be considered as owning the entire joint tenancy account upon the death of the parent, to the exclusion of other children or natural heirs of the parent.
These unintended results could apply unless it could be proven in court that the joint tenancy account was intended to be used only for the convenience of the parent.
The new law is intended to alleviate some of these problems with use of a joint tenancy account.
However, the new convenience account is not a substitute for providing for transfer of the account upon the death of the owner through a Will or a Living Trust.
A properly drafted Will or Living Trust, as part of your entire estate plan, should be used together with consideration of the proper titling of your accounts to make sure that the account (and the rest of your property) goes to the persons you desire upon your death.
In many cases individuals may choose a convenience account or joint tenancy account at the moment of opening an account as a quick easy alternative without coordinating their use of bank accounts with their complete estate plan.
You should review your entire estate plan with your attorney before choosing the type of bank accounts you may wish to use.
This article is intended to present general information for educational purposes, is not legal advice and should not be relied upon in connection with any particular matter.
The reader is advised to immediately retain their own separate legal counsel with respect to any specific legal issue.
Rights to bring a claim will expire through the passage of time by the applicable statute of limitations.
" These accounts are intended for those who may need assistance with banking.
For example, a parent needing assistance with banking could add a child to the account as a "convenience depositor.
" The child would be able to make deposits and the bank could pay out to either the parent or the child for the convenience of the parent.
The ownership of the deposits would be in the name of the parent, and the parent's social security number would be used.
The funds would not be considered as given one-half to the child, and the child would not receive the account as a survivor upon the parent's death.
The new convenience account can be an effective alternative to opening a joint tenancy account in the name of the parent and the child.
There are some problems with the common use of a joint tenancy account in this type of situation.
Under some circumstances, the child can be considered to have received a gift of one-half of the joint tenancy account.
This could cause the joint tenancy account to be subject to creditors of the child.
Such a gift, if over $13,000.
00 per person in a single year (reflecting the 2011 limit) would require the filing of a gift tax return.
Also, the child could be considered as owning the entire joint tenancy account upon the death of the parent, to the exclusion of other children or natural heirs of the parent.
These unintended results could apply unless it could be proven in court that the joint tenancy account was intended to be used only for the convenience of the parent.
The new law is intended to alleviate some of these problems with use of a joint tenancy account.
However, the new convenience account is not a substitute for providing for transfer of the account upon the death of the owner through a Will or a Living Trust.
A properly drafted Will or Living Trust, as part of your entire estate plan, should be used together with consideration of the proper titling of your accounts to make sure that the account (and the rest of your property) goes to the persons you desire upon your death.
In many cases individuals may choose a convenience account or joint tenancy account at the moment of opening an account as a quick easy alternative without coordinating their use of bank accounts with their complete estate plan.
You should review your entire estate plan with your attorney before choosing the type of bank accounts you may wish to use.
This article is intended to present general information for educational purposes, is not legal advice and should not be relied upon in connection with any particular matter.
The reader is advised to immediately retain their own separate legal counsel with respect to any specific legal issue.
Rights to bring a claim will expire through the passage of time by the applicable statute of limitations.
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