Does your FI allow the removal of an individual on a deposit account without having to close the existing account and open a new one?

Only in the case of death do we not require customer to close and reopen.

We do the same here as Sunshine Lady posted.

Hmm. Trying to figure out why we would require the account to be closed and open a new one. Seems like a waste of time. Maintenance the account, remove whomever and have new signature cards signed, easy-

Because when the person that got removed sues you because they say you didn't have permission to remove them, the extra work won't seem quite as bad.

The situation that happened yesterday that prompted me to look into it was that there were 3 people on the account (siblings), all 3 came into a branch and 2 wanted to be removed with the other remaining. So in this instance, where they were in person, not sure we wouldn't allow it.

We do allow it if all joint owners come in together. The owner(s) being removed sign a form stating they want to be removed and the remaining owner(s) sign a new signature card showing only their name(s).

Sure you can allow it but it opens up a huge can of worms that may or may not come back to haunt you.

It's easy enough to deactivate the former owner's ATM/debit card, but that person knows the account and routing number and might also have checks that could be issued accidentally or intentionally. You would also have to remember to check for and remove online and mobile access, if applicable.

We only allow it in the case of a death of a spouse. In all other cases, including deaths involving someone other than a spouse, we require the account to be closed and a new one opened.

Well I am opening up the can of worms. We are a small community bank that has customers that want to be able to do this for them. I think with the right controls in place, we can accomplish this for our customers.

Well, if you want the customer to run the bank and determine your risk - that is the way to go. When the bank is looking at a 5 or 6 figure loss because those controls broke down when the risk could have been totally eliminated from the get go, the bank may choose to re-think that approach. "It has never been an issue" always leads to the big one time loss.

I appreciate your insight Randy as always.

Outside of death of an owner, we don't allow it at all based on risk. Work with the remaining person to facilitate the switch to the new account as easy as possible. I've honestly never had a person have a problem with it once I provide insight to explain why necessary. I'm with a small community bank as well and we do everything we can to accommodate the vast majority of our customer needs but this falls outside of that.

I don't know how you can legally accomplish this without leaving the bank fully on the hook. When you opened the account, parties signed an account agreement. Do you have any language in your account agreement that addresses removal? Doubtful. Simply signing a new account agreement with fewer owners doesn't extinguish the original contract you have with the original parties to the account.

So what agreement are the removed parties signing stating that they wish to be removed, that the remaining parties are ok with the removal, and who will be fully responsible for any outstanding activity that clears the account post removal, and or new activity by the removed parties post removal? A new signature card doesn't address any of these issues or risks.

You have language in your current account agreement that allows any party to the account to close the account at any time for whatever reason, use it to your advantage and for everyone's protection.

On the flip side of the issue -- adding an owner to an account is also something I don't recommend. And it's particularly risky when the added owner is a second spouse. From a long-ago experience in which grown children from a first marriage dragged the bank into a civil suit over their deceased dad's money (high 6-figures) in a savings account made joint with their step-mother (who was, of course, younger than the youngest of those grown children), we decided that "adding a co-owner" would be handled as a new account with new signature card and the old account could remain open or closed. We wanted clear legal documentation of the intent of the parties when they become co-owners of an account.

Close account A. Open account B and be done with it.