Illinois Estate Planning & Elder Law Blog

Effective January 1, 2010, Illinois enacted the Banking Convenience Account for Depositors Act which allows account owners to create joint accounts that allow non-owners to make deposits and withdrawals. The accounts do not have Payable On Death or Transfer on Death designations. The non-owners have no survivorship rights as there would be with a common joint tenancy account.

The accounts are useful where an elderly person has an adult child assist with banking, such as making deposits and paying bills, but where there is no intention to make the balance in the account a gift to the non-owner upon the death of the owner.

The banks are protected. Until the bank receives written notice of the death of the account owner, it has no liability for continuing to pay funds to the non-owner. Once the bank does receive written notice, unless there is a restraining order or injunction in place, the bank is discharged from liability by delivering the remaining funds in the account to the executor, administrator or other representative of the estate.

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Posted by Anne Rabuck | Permalink | Email This Post

Posted In: Banking

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In his Wall Street Journal article titled A Short Banking History of the United States, John Steele Gordon gives a succinct and interesting overview of the banking system in this country and explains why the current banking crisis may have a bright side and may result in a unified banking system free from unwanted political influence.

Mr. Gordon points out how the struggle to establish a central banking system began at the founding of the United States. Alexander Hamilton, who had experience with and an understanding of markets, won his battle with Thomas Jefferson and established the Bank of the United States in 1792. But as the Jeffersonians gained power and dominated, the Bank's charter was not renewed in 1811. President Madison realized the importance of a central bank and a second bank was established in 1816. This second bank was short lived, having been killed by Andrew Jackson, a staunch Jeffersonian, and the United States had no central bank for many decades.

This back and forth between political forces in favor of a strong central banking system which would guard the money supply and act as a lender of last resort to regular banks in times of financial crisis and those political forces opposed to the concentration of economic power went on until after the Civil War when Congress passed the National Bank Act. This made federal charters available to banks with enough capital and which would also agree to strict regulation.

As Mr. Gordon sums it up in his article, "In the 1990's interstate banking was finally allowed, creating nationwide banks of unprecedented size. But Congress' attempt to force banks to make home loans to people who had limited creditworthiness, while encouraging Fannie Mae and Freddie Mac to take these dubious loans off their hands so that the banks could make still more of them, created another crisis in the banking system that is now playing out. While it will be painful, the present crisis will at least provide another opportunity to give this country, finally, a unified banking system of large, diversified, well-capitalized banking institutions that are under the control of a unified and coherent regulatory system free of undue political influence."

Posted by Anne Rabuck | Permalink | Email This Post

Posted In: Banking

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