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Feb 16, 2010

New Illinois Law Allows Convenience Accounts for the First Time

As of January 1, 2010, a new Illinois law allows bank account holders to name another person on their account for the sake of convenience. Previously, your sole option in naming another person on your account was as joint tenants with rights of survivorship, meaning the joint tenant is entitled to inherit the account upon your death.  It also meant that you were making an inter vivos gift, or in other words, giving the joint tenant the right to legally take all of your money for himself. And it meant that you could not remove the joint tenant without his consent– even if he was withdrawing money from the account for himself without your permission!

Fortunately, the new law allows you to name a person on your account without making an inter vivos gift and without entitling that person to inherit your account upon your death.  Most importantly, the new law allows you to remove the person from your account at any time without his permission.  With this new law, you can now open a “convenience account” in your name and add your nephew or other trusted individual to the account as a “convenience depositer.”  While you will manage and control the account, you will be enabling your nephew to deposit funds or withdraw funds from the account for your convenience and needs. You will not be making an inter vivos gift to your nephew, nor will he be able to inherit the account upon your death. The account will pass in accordance with your will or trust. Furthermore, if at any time you become displeased with your nephew or no longer want him managing your funds, you can remove him from the account without his permission. The new convenience account is a good tool to use when you want to give a trusted individual the right to manage an account without giving him the right to take the funds for himself and without giving him the right to inherit the account upon your death.  However, be forewarned: the person you name on your convenience bank account could, in fact, still run off with your money without your permission. Although he will have access to the money, it will not be legal for him to take it.

Your joint accounts will not be converted automatically to convenience accounts under this new law and you still have the option of holding joint accounts. In order for this new law to apply, you will need to go to your bank and open a new convenience account.