                           ILLINOIS OFFICIAL REPORTS
                                        Appellate Court




                Fairfield National Bank v. Chansler, 2013 IL App (5th) 110530




Appellate Court            FAIRFIELD NATIONAL BANK, Plaintiff-Appellee, v. ABIGAIL
Caption                    CHANSLER and CORDELIA CHANSLER, Defendants-Appellees, and
                           BELINDA MUNSELL, Individually and as Independent Executor of the
                           Estate of Malinda G. Munsell, Defendant-Appellant.



District & No.             Fifth District
                           Docket No. 5-11-0530


Filed                      January 22, 2013


Held                       In an interpleader action filed by plaintiff bank seeking a determination
(Note: This syllabus       of the rights to two certificates of deposit with payable-on-death
constitutes no part of     provisions opened by the mother of the defendant executor naming two
the opinion of the court   of defendant’s daughters as beneficiaries, the trial court erred in finding
but has been prepared      that the beneficiaries had not been changed when the bank received and
by the Reporter of         processed the paperwork defendant’s mother mailed to the bank making
Decisions for the          defendant the beneficiary of the certificates one day after defendant’s
convenience of the         mother died, since the bank had authority to accept the written
reader.)
                           instruments and respond to the intentions of defendant’s mother, and if
                           the trial court determines on remand that the bank did so, the change
                           should be deemed effective.


Decision Under             Appeal from the Circuit Court of Hamilton County, No. 11-MR-02; the
Review                     Hon. Barry L. Vaughan, Judge, presiding.



Judgment                   Reversed and remanded with directions.
Counsel on                 James L. Van Winkle, of Van Winkle & Van Winkle, of McLeansboro,
Appeal                     for appellant.

                           John P. Farrar and Abbey M. Brian, both of Farrar & Brian, P.C., of Mt.
                           Carmel, for appellees Abigail Chansler and Cordelia Chansler.

                           Jay H. Fyie, of Fyie & Hawkins, of Fairfield, for appellee Fairfield
                           National Bank.


Panel                      JUSTICE GOLDENHERSH delivered the judgment of the court, with
                           opinion.
                           Justices Chapman and Stewart concurred in the judgment and opinion.




                                             OPINION

¶ 1         Plaintiff, Fairfield National Bank, filed an action in interpleader in the miscellaneous
        remedies division of the circuit court of Hamilton County requesting an order determining
        the rights of respective defendants for two certificates of deposit. The circuit court entered
        summary judgment in favor of defendants Abigail and Cordelia Chansler, finding that the
        designated beneficiaries on the certificates of deposit had not been changed in the timely
        manner required by the Illinois Trust and Payable on Death Accounts Act (Act) (205 ILCS
        625/1 to 15 (West 2010)). Defendant Belinda Munsell, individually and as independent
        executor of the estate of Malinda G. Munsell, deceased, appealed. On appeal, the issue is
        whether Fairfield National Bank had authority to change the beneficiaries on the certificates
        of deposit.
¶ 2         We reverse and remand.

¶ 3                                           FACTS
¶4          On October 12, 2010, Malinda opened two certificates of deposit with payable-on-death
        (POD) provisions at Fairfield National Bank. As payable-on-death accounts, Malinda
        remained the holder of the accounts, but for each of the certificates she named a designated
        beneficiary upon her death. For one certificate, her granddaughter, Abigail Chansler, was
        designated a beneficiary, and on the other certificate another granddaughter, Cordelia
        Chansler, was named beneficiary.
¶ 5         Sometime in early March 2011, Malinda telephoned Fairfield National Bank and
        requested forms for changing the beneficiaries on the certificates of deposit. On March 4,
        2011, Fairfield National Bank prepared and mailed to Malinda withdrawal forms, signature

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       cards, and confirmations of time deposit. Malinda filled in the paperwork to indicate a
       change of the designated beneficiary for both certificates of deposit to Belinda Munsell,
       Malinda’s daughter and the mother of both Abigail and Cordelia. On March 12, 2011, the
       filled-in forms and a $10 check for a processing fee were placed in the mail. Malinda died
       on March 14, 2011.
¶ 6         On March 15, 2011, Fairfield National Bank received the forms, processed the
       paperwork, accepted the $10 check, and changed the designated beneficiary on both of the
       certificates of deposit, assigning new numbers to the accounts.
¶ 7         On March 22, 2011, Jeff Chansler, ex-husband of Belinda and father of Abigail and
       Cordelia, contacted Fairfield National Bank and informed them that Malinda had died before
       the date the paperwork had been processed. Jeff Chansler asserted that Abigail and Cordelia
       were the rightful beneficiaries of the accounts.
¶8          Fairfield National Bank filed this complaint in interpleader. The Chanslers filed a motion
       for summary judgment asserting that the certificates should have remained in the original
       form with each of them as designated beneficiaries on the date of Malinda’s death. Belinda,
       individually and as the executor of the estate of Malinda, filed a motion for summary
       judgment asserting that Malinda had effectively changed the beneficiaries for the certificates
       of deposit or, alternatively, revoked the designations of the Chanslers as beneficiaries in such
       a manner that the assets of the account became part of Malinda’s estate. The trial court
       entered summary judgment in favor of the Chanslers, finding that the designated
       beneficiaries had not been changed according to the terms of the Act.
¶ 9         Belinda appeals.

¶ 10                                          ANALYSIS
¶ 11       The underlying action is one in interpleader. The interpleading party, a bank, seeks a
       determination of whether it had authority to accept Malinda’s request for a change of
       beneficiaries on two certificates of deposit. The certificates of deposit were arranged as
       payable on death of Malinda. Payable-on-death accounts are authorized by the Act. 205 ILCS
       625/1 to 15 (West 2010). The Act, however, is ambiguous. The answer rests in the ordinary
       care of financial institutions.
¶ 12       Payable-on-death accounts are recognized as a useful tool for estate planning. See Helen
       W. Gunnarsson, POD and TOD Accounts and Your Estate-Planning Arsenal, 95 Ill. B.J. 510
       (2007). This was not always so. Such accounts are often referred to as Totten trusts–after
       precedent establishing their validity. In re Totten, 71 N.E. 748, 750 (N.Y. 1904). The
       propriety of Totten trusts was challenged in several jurisdictions because the requirements
       for creating such an account are not as stringent as the witnessing requirements for a will. 17
       Robert S. Hunter, Illinois Practice § 38:1 (4th ed. 2007) (“The nature of the payable on death
       account”).
¶ 13       In 1965, the Illinois Supreme Court recognized the validity of Totten trusts. In re Estate
       of Petralia, 32 Ill. 2d 134, 135, 204 N.E.2d 1, 2 (1965). Petralia held that the signature card
       for a savings account designating the holder’s daughter as a beneficiary on his death was
       sufficient to create a valid trust despite not being witnessed as a will. Petralia recognized the

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       definition of Totten trusts provided in the Restatement (Second) of Trusts as the law of
       Illinois. Petralia, 32 Ill. 2d at 138, 204 N.E.2d at 3; Restatement (Second) of Trusts § 58
       (1959).
¶ 14        Prior to the Act, the legislature authorized payable-on-death accounts in certain financial
       institutions through the Illinois Savings and Loan Act. Ill. Rev. Stat. 1955, ch. 32, ¶ 770.
       These accounts were seen as clearly testamentary. In re Estate of Gubala, 81 Ill. App. 2d
       378, 382, 225 N.E.2d 646, 649 (1967); Johnson v. Garellick, 118 Ill. App. 2d 80, 83, 254
       N.E.2d 597, 599 (1969). Nonetheless, the legislature exempted such payable-on-death
       accounts from the requirements of the statute of wills. Johnson, 118 Ill. App. 2d at 83, 254
       N.E.2d at 599; see In re Estate of Wright, 17 Ill. App. 3d 894, 896-97, 308 N.E.2d 319, 321
       (1974) (absence of similar provision in the Illinois Banking Act did not indicate that
       legislature intended to proscribe holders from creating Totten trusts at banks and other
       financial institutions).
¶ 15        In 1985, the General Assembly established the Act. 205 ILCS 625/1 to 15 (West 2010);
       Pub. Act 84-461, §§ 1-5 (eff. Jan. 1, 1986). The Act covers a broad array of financial
       institutions, including those under the Illinois Savings and Loan Act and the Illinois Banking
       Act. 205 ILCS 625/2(a) (West 2010). Certificates of deposit are specifically listed as a type
       of account covered by the Act. 205 ILCS 625/2(b) (West 2010).
¶ 16        Section 4 of the Act now embodies the law for “Payable on Death Account Incidents.”
       205 ILCS 625/4 (West 2010). The introductory paragraph authorizes a holder, or holders, of
       an account to enter into an agreement with a financial institution that provides for payment
       of the account to designated beneficiaries on the death of the last surviving holder. Sequential
       subparagraphs provide terms for change of the designated beneficiaries, deposits and
       withdrawals by the holder, and survivorship issues. 205 ILCS 625/4(a), (b), (c) (West 2010).
¶ 17        Paragraph (a) provides the procedure for the change of beneficiaries:
                “§ 4. Payable on Death Account Incidents. If one or more persons opening or holding
            an account sign an agreement with the institution providing that on the death of the last
            surviving person designated as holder the account shall be paid to or held by one or more
            designated beneficiaries, the account, and any balance therein which exists from time to
            time, shall be held as a payment on death account and unless otherwise agreed in writing
            between the person or persons opening or holding the account and the institution:
                (a) Any holder during his or her lifetime may change any of the designated
            beneficiaries to own the account at the death of the last surviving holder without the
            knowledge or consent of any other holder or the designated beneficiaries by a written
            instrument accepted by the institution[.]” 205 ILCS 625/4(a) (West 2010).
¶ 18        Applied to the circumstances at hand, paragraph (a) is ambiguous. Paragraph (a) uses the
       time-laden phrase “during his or her lifetime” and the past-tense verb “accepted,” but is
       structured as applying to the actions of the holder of the account and not the financial
       institution. The Chanslers argue that the bank lacked authority because it did not accept the
       written instruments of change during the life of Malinda, the holder. Belinda contends that
       Malinda did all that was required of her for the “written instrument” during her lifetime and
       that this was sufficient for a change of designated beneficiaries.

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¶ 19       The primary objective in construing a statute is to ascertain and give effect to the intent
       of the legislature. JPMorgan Chase Bank, N.A. v. Earth Foods, Inc., 238 Ill. 2d 455, 461,
       939 N.E.2d 487, 490 (2010). The plain language of the statute is the most reliable indication
       of legislative intent, and when the language of the statute is clear, it should be applied as
       written without resort to aids or tools of interpretation. DeLuna v. Burciaga, 223 Ill. 2d 49,
       59, 857 N.E.2d 229, 236 (2006). In instances where the application of a statute is ambiguous,
       courts may consider other tools of construction. In re D.D., 196 Ill. 2d 405, 419, 752 N.E.2d
       1112, 1120 (2001).
¶ 20       Application of tools of statutory construction reveals the provision for change of
       beneficiaries in the Act was intended to protect the intentions of the holder of the account,
       and not to set a bright-line time for the acceptance or written instruments by financial
       institutions. Courts should look to the purpose and meaning of terms as they are used in other
       statutes and the common law at the time legislation is passed. JPMorgan Chase Bank, N.A.,
       238 Ill. 2d at 462, 939 N.E.2d at 491. The terms and provisions should be construed as a
       whole in order to effectuate the intent of the legislature. In re Consolidated Objections to Tax
       Levies of School District No. 205, 193 Ill. 2d 490, 500, 739 N.E.2d 508, 514 (2000). Both
       the Act as a whole and the history of payable-on-death accounts call for giving the
       interpleader the authority to accept Malinda’s request for change of beneficiaries.
¶ 21       The more cogent reading is that the timing is addressed to the actions of the holder of the
       account. Grammatically, the “holder” is the actor in paragraph (a). Indeed, the ambiguity of
       the Act stems, in part, from the separation of the actor, “holder,” from the form of action,
       “written instrument.” When the interceding language is removed, the paragraph reads that
       a “holder during his or her lifetime may change any of the designated beneficiaries *** by
       a written instrument accepted by the institution.” 205 ILCS 625/4(a) (West 2010).
¶ 22       From the perspective of an estate planner, the paragraph instructs the holder how she
       “may change” the designated beneficiaries. The holder, “any holder,” may make the change
       without the consent of other holders or designated beneficiaries, but this must be
       accomplished “by a written instrument.” The timeline for the holder’s actions for this written
       instrument is “during his or her lifetime.”
¶ 23       The origins of the phrase “during his or her lifetime” strongly suggest that the timeline
       extends only to the execution of the written instrument by the holder, and not to the time of
       acceptance by the financial institution. The common law recognition of Totten trusts in
       Petralia and the legislation that preceded the Act both shed insight on this phrase.
¶ 24       The phrase was parlance in the common law before the Act. Petralia adopted the
       definition of the Totten trust provided by the Restatement:
                “§ 58. Tentative Trust of Savings Deposit
                Where a person makes a deposit in a savings account in a bank or other savings
           organization in his own name as trustee for another person intending to reserve a power
           to withdraw the whole or any part of the deposit at any time during his lifetime and to use
           as his own whatever he may withdraw, or otherwise to revoke the trust, the intended trust
           is enforceable by the beneficiary upon the death of the depositor as to any part remaining
           on deposit on his death if he has not revoked the trust.” (Emphasis added.) Restatement

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            (Second) of Trusts § 58 (1959).
¶ 25        An official comment to the Restatement explains that the phrase “during his lifetime”
       explains that the intent of the holder, and not any interest of potential beneficiaries, dictates
       the rights in the assets. In order to revoke the account, the holder need only manifest her
       intention. Comment c instructs courts that the intention of the holder/depositor should be
       honored:
                 “c. Revocation of tentative trust. A tentative trust of a savings deposit can be revoked
            by the depositor at any time during his lifetime, by a manifestation of his intention to
            revoke the trust. No particular formalities are necessary to manifest such an intention. If
            he withdraws any part of the deposit during his lifetime, the withdrawal operates as a
            revocation of the trust to the extent of such withdrawal, and the beneficiary will be
            entitled only to the amount remaining on deposit at the death of the depositor.”
            Restatement (Second) of Trusts § 58 cmt. c (1959).
       If the Restatement is applied as guided by comment c, the phrases “during his lifetime” and
       “on his death” do not operate as timing requirements, but as a mechanism for protecting the
       guiding principle of the intention of the depositor/holder. In other words, any potential
       beneficiaries do not have a right independent of the holder/depositor’s intentions. If the
       guidance of comment c is applied to the Act, the test is whether Malinda manifested her
       intentions.
¶ 26        The phrase “during his lifetime” was also used in legislation in effect prior to the Act
       authorizing payable-on-death accounts held in savings and loan institutions. The Illinois
       Savings and Loan Act provided that “[a]ny such trustee during his lifetime may change any
       of the designated beneficiaries by a written direction accepted by the association.” (Emphasis
       added.) Ill. Rev. Stat. 1955, ch. 32, ¶ 770(b)(1). The wording of this prior legislation is
       similar but does not have the interceding language separating the actor, “trustee” or “holder,”
       from the form of action, “written direction” or “written instrument.” Ill. Rev. Stat. 1955, ch.
       32, ¶ 770(b)(1); compare 205 ILCS 625/4(a) (West 2010).
¶ 27        Illinois courts found that the phrase went to the absolute control and dominion of the
       holder. The phrase distinguished payable-on-death accounts from inter vivos gifts. Gubala,
       81 Ill. App. 2d at 382, 225 N.E.2d at 649; Johnson, 118 Ill. App. 2d at 83, 254 N.E.2d at 599.
       In order for an inter vivos gift to become legally effective, a transaction must be fully
       consummated during the life of the donor. Dudley v. Uptown National Bank of Moline, 25
       Ill. App. 2d 514, 521, 167 N.E.2d 257, 261 (1960). In contrast, payable-on-death accounts
       were found to be testamentary and did not require delivery. Gubala, 81 Ill. App. 2d at 382,
       225 N.E.2d at 649.
¶ 28        Thus, the phrase ensured that no constraints would be made on the holder’s intended
       disposition. Illinois courts interpreting the Illinois Savings and Loan Act established:
            “ ‘The disposition of funds in a “[payable-on-death] account” is clearly testamentary, not
            inter vivos, in nature. In order for there to be an inter vivos gift the donor must have
            donative intent, he must part with exclusive dominion and control over the subject matter
            and there must be a delivery. Frey v. Wubbena, 26 Ill2d 62, 185 NE2d 850. The
            beneficiary of a “[payable-on-death] account” cannot withdraw any of the money prior

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            to the owner’s death and has no legal redress to protect himself against a wasteful
            dissipation of the funds by the owner. In effect, his interest comes into being only at the
            owner’s death. The owner of a “[payable-on-death] account” therefore does not, during
            his lifetime, part with exclusive dominion and control over the funds therein.’ ” Johnson,
            118 Ill. App. 2d at 83-84, 254 N.E.2d at 599 (quoting Gubala, 81 Ill. App. 2d at 382-83,
            225 N.E.2d at 649-50).
¶ 29        Put simply, the phrase originates from an attempt to remove restraints on a holder’s
       control of the account “during his or her lifetime.” The use of the phrase “during his lifetime”
       in the Restatement called for courts to respect the “manifestation of intent” of the holder. The
       same phrase in the Illinois Savings and Loan Act expressed the “exclusive control and
       dominion” of the holder. Interpreting this phrase as a restriction on the holder’s intent, and
       requiring the formal acceptance to occur before the holder’s death, runs contrary to these
       origins.
¶ 30        The phrase “during his or her lifetime” has not been specifically addressed in the context
       of section 4. Nonetheless, the few precedents interpreting the Act have found that the policy
       behind the statutory scheme is to effectuate the intent of the holder. Cotton v. First State
       Bank of Mendota, 182 Ill. App. 3d 400, 402, 537 N.E.2d 1103, 1105 (1989); In re Estate of
       Weiland, 338 Ill. App. 3d 585, 602, 788 N.E.2d 811, 826 (2003); Gonzalez v. Second Federal
       Savings & Loan Ass’n, 2011 IL App (1st) 102297, ¶ 47, 954 N.E.2d 245. In Cotton, the
       holder of the account was found to have revoked a payable-on-death provision for an account
       in December 1984, before the Act took effect. In Cotton, the bank called the holder, a 92-
       year-old aunt of the named beneficiary, after becoming suspicious that her niece was exerting
       undue influence. After the holder stated that she did not want to name anyone as a
       beneficiary, a bank employee whitened out the payable-on-death provision on the certificate.
¶ 31        Cotton found that the bank had no obligation to consult with the beneficiary about the
       change. Cotton noted that Illinois courts had already established that holders of such accounts
       have the absolute right to alter or remove payable-on-death provisions. Cotton, 182 Ill. App.
       3d at 402-03, 537 N.E.2d at 1105 (citing Gubala, 81 Ill. App. 2d at 382-83, 225 N.E.2d at
       649-50). Cotton concluded that this was consistent with the recently enacted paragraph 4(a):
            “To hold that a third-party beneficiary must be informed of changes in a payable-on-
            death account would mean that the owner could not change the account without
            contacting the beneficiary. This runs counter to the well-established rule of law that the
            owner of a payable-on-death account has exclusive dominion and control over the funds
            of the account during her lifetime. Additionally, this court notes that the legislature,
            subsequent to the occurrences in this case, clarified the notice issue by stating that the
            holder of a payable-on-death account may change the designated beneficiaries without
            the consent or knowledge of such persons. Ill. Rev. Stat. 1987, ch. 17, par. 2134(a).”
            Cotton, 182 Ill. App. 3d at 402-03, 537 N.E.2d at 1105.
¶ 32        In Weiland, the holder’s failure to sign a signature card did not invalidate the creation of
       a payable-on-death account. After quoting paragraph 4 in its entirety, Weiland noted as
       follows:
            “While section 4 of the Act requires a signed agreement evincing the intent of the holder


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            to create a POD account, nothing in the Act specifies the form that the agreement must
            take. Indeed, it is well established that it is the intent of the account holder, not the form
            of the written agreement, that governs whether the holder intended to establish a POD
            account.” Weiland, 338 Ill. App. 3d at 603, 788 N.E.2d at 826-27.
¶ 33        Following Weiland, Gonzalez found that a holder need not alter or sign a signature card
       in order to change the designation of beneficiaries. Essentially, Gonzalez applied the
       rationale behind Weiland to changes under paragraph 4(a). Gonzalez noted that a written
       instrument executed by the holder creates a presumption that the holder intended to create
       such an account. Gonzalez, 2011 IL App (1st) 102297, ¶ 47, 954 N.E.2d 245 (quoting
       Weiland, 338 Ill. App. 3d at 598, 788 N.E.2d at 822). Gonzalez rejected the argument that
       the signature cards were the only documents that could demonstrate the change of
       beneficiaries. After all, the Act does not specify the form of written instrument needed for
       change, only that it is accepted by the financial institution. Thus, when the bank allowed
       funds to be withdrawn from the accounts based on the holder having crossed out and written
       new beneficiaries directly on the certificates, the actions were “ ‘a written instrument
       accepted by the institution.’ ” Gonzalez, 2011 IL App (1st) 102297, ¶ 51, 954 N.E.2d 245.
¶ 34        Gonzalez, as with Weiland and Cotton before it, was guided by the policy of effectuating
       the intent of the holder. Moreover, Gonzalez rested on the understanding that the phrase
       “accepted by” went to form, not timing. Gonzalez held that the bank was responsible for the
       change it had acknowledged, but this also meant that the propriety of the document
       requesting change is determined by whether the financial institution actually accepted the
       instrument.
¶ 35        This leads to the justification the trial court gave for interpreting the Act as requiring the
       change to be accepted by the interpleader before Malinda’s death. The trial court reasoned
       that the Act was intended to protect financial institutions, as well as the intent of holders, by
       respecting only written instruments that are actually accepted before a holder’s moment of
       death–a bright-line test. Such a directive is not warranted by the use of the term “accepted.”
       Moreover, imposing such a bright-line test would run counter to the ordinary care of
       accounts and, rather than protecting, would actually restrict financial institutions.
¶ 36        Historically, Totten trusts were controversial because they allowed for testamentary
       exchanges without the verifying requirements of the statute of wills. 17 Robert S. Hunter,
       Illinois Practice § 38:1 (4th ed. 2007) (“The nature of the payable on death account”). Illinois
       allowed such accounts because the intentions of a decedent were protected as long as the
       holder entered into a written agreement with the financial institution to create such an
       account. Petralia, 32 Ill. 2d at 137, 204 N.E.2d at 3; Gubala, 81 Ill. App. 2d at 382, 225
       N.E.2d at 649. Likewise, a request for change of beneficiaries must be in a written form
       acceptable by the financial institution. This protection has no logical connection with
       requiring the actual acceptance by the institution before the decedent passes. In other words,
       the requirement that the request for change is “accepted by the institution” goes to form, not
       to timing.
¶ 37        In essence, defendants assert that the Act instructs financial institutions of a bright-line
       test for the time of acceptance. Paragraph 4(a) is not grammatically structured as such an


                                                  -8-
       instruction. Unlike other sections of the Act, paragraph 4(a) is structured as instruction to the
       holder of an account, and not to financial institutions. In paragraph 4(a), the holder is the
       actor who “may change” the account, and the financial institution, which the written
       instrument may be “accepted by,” is passive.
¶ 38        The grammatical structure of paragraph 4(a) indicates that the timeline “during his or her
       lifetime” addresses only the actions of the holder, but confusion arises because the
       measurement of acceptability is in the past tense–as “accepted.” The flexibility of the Act,
       and the policy of protecting financial institutions, explains the use of the past tense. By
       allowing a change of designated beneficiaries through any form “accepted” by the institution,
       the Act leaves the form of acceptable document to the discretion of the financial institution.
       Thus, as in Gonzalez, a financial institution may become liable for any instrument it
       accepted, but the form of the acceptable document is left to the discretion of the institution.
¶ 39        This is consistent with the policy of the Act. The types of accounts that may be structured
       as payable on death under the Act vary broadly, ranging from credit union shares to
       certificates of deposits. 205 ILCS 625/2(b) (West 2010). As such, the forms of written
       instrument used to change the diverse types of accounts inevitably will vary. By recognizing
       the propriety of any “written instrument accepted by the institution,” the Act allows for such
       flexibility. Adding a bright-line test requiring a financial institution to accept the request
       before the holder dies would not enhance this policy.
¶ 40        In the end, the facial ambiguity of the Act arises from the legislature’s use of time-based
       terms “during his or her lifetime” and “accepted” for reasons other than establishing a bright-
       line test for the time beneficiaries may be changed. This does not mean that the legislature
       did not contemplate financial institutions being faced with documents submitted after the
       death of their clients. The legislature addressed such dilemmas by enacting the Uniform
       Commercial Code–Bank Deposits and Collections (810 ILCS 5/4-101 to 4-504 (West 2010)).
¶ 41        The Uniform Commercial Code instructs financial institutions, such as the interpleader,
       of their authority and responsibility in situations where the holder of an account dies after
       forwarding otherwise acceptable documents. The Uniform Commercial Code provides:
                “§ 4-405. Death or incompetence of customer.
                (a) A payor or collecting bank’s authority to accept, pay, or collect an item or to
            account for proceeds of its collection, if otherwise effective, is not rendered ineffective
            by incompetence of a customer of either bank existing at the time the item is issued or
            its collection is undertaken if the bank does not know of an adjudication of
            incompetence. Neither death nor incompetence of a customer revokes the authority to
            accept, pay, collect, or account until the bank knows of the fact of death or of an
            adjudication of incompetence and has reasonable opportunity to act on it.
                (b) Even with knowledge, a bank may for 10 days after the date of death pay or
            certify checks drawn on or before that date unless ordered to stop payment by a person
            claiming an interest in the account.” 810 ILCS 5/4-405 (West 2010).
       This provision of the Uniform Commercial Code specifically addresses the situation at hand
       and informs the authority of the interpleader. The interpleader had the authority to accept the
       items presented by Malinda before knowing the fact of her death.

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¶ 42       The Uniform Commercial Code complements the requirements for distribution under the
       Act. Section 10 of the Act controls the distribution of funds of a payable-on-death account.
       205 ILCS 625/10 (West 2010). Section 10 provides that a financial institution is not required
       to distribute assets until presented with legal evidence of the death of the holder and proper
       requests by beneficiaries. 205 ILCS 625/10 (West 2010). Moreover, the Act protects a
       financial institution for payments made prior to the receipt of a notice of an adverse claim.
       205 ILCS 625/5 (West 2010). Authorizing a financial institution to accept requests for
       change presented by a holder prior to her death pursuant to the Uniform Commercial Code
       allows financial institutions to effectuate the intent of the holder while not inhibiting the
       procedure for distribution under the Act. Furthermore, this clarifies that paragraph 4(a) gives
       holders absolute control over the designation of beneficiaries, while paragraph 4(c) addresses
       survivorship issues. 205 ILCS 625/4(a), (c) (West 2010). In conjunction, the Act and the
       Uniform Commercial Code allow financial institutions to respond in good faith to the
       manifested intentions of their clients.
¶ 43       The clarity of the Uniform Commercial Code, and its effective coordination with the
       provisions for distribution of the Act, also resolves one further concern that would otherwise
       be more problematic. On appeal, Belinda argues, in the alternative, that even if the
       documents submitted by Malinda could not change the beneficiaries, the payable-on-death
       provisions were effectively revoked. The argument that, for the purposes of the Act, the
       interpleader created new certificates of deposit is of dubious merit. Although new numbers
       were assigned to the certificates, the signature cards and confirmations of deposit remained
       the date of creation of the accounts–October 12, 2010. In any event, the Uniform Commercial
       Code gives financial institutions the right to accept, and account, for a reasonable time after
       the death of a client, and Malinda instructed the interpleader through precise written
       instruments.
¶ 44       Summary judgment in favor of defendant Chanslers is unwarranted. The interpleader had
       authority to accept the written instruments from Malinda. On remand, if the trial court
       determines that the interpleader accepted the written instruments, then the change of
       beneficiaries was effective under the Act and the interpleader is not subject to liability for
       having accepted the instruments.
¶ 45       Accordingly, the order of the circuit court of Hamilton County is hereby reversed and the
       matter is remanded with directions.

¶ 46      Reversed and remanded with directions.




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