What's happening
This bill requires banks and similar institutions to offer a "convenience account" option when opening joint deposit accounts.
Why it matters
Greater consumer choice and clarity. By requiring banks to offer a "convenience account" option when opening joint accounts, the bill ensures that customers are made aware of an account type specifically designed to avoid automatic right of survivorship, clarifying ownership and inheritance issues.
Protection of depositor intent. The convenience account structure protects the depositor’s assets from unintentionally passing to a co-owner upon death, potentially reducing legal disputes among heirs or confusion about the account's purpose.
Enhanced transparency and regulation. The bill mandates clear disclosure of the terms and differences between convenience and traditional joint accounts, supporting more informed decision-making by consumers and consistent practices across financial institutions.
Potential impact on estate planning. This change could influence how individuals approach estate planning, as convenience accounts offer a simpler way to allow another person to assist with transactions without granting them ownership rights after the depositor’s death.
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Who cares
Headline styles
Require Convenience Accounts Option
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.1137
- Referred to banks
- Reported and committed to rules
- Referred to banks
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5810
2017-2018 Regular Sessions
IN SENATE
May 2, 2017
Introduced by Sen. SERINO -- read twice and ordered printed, and when printed to be committed to the Committee on Banks
AN ACT to amend the banking law, in relation to joint deposit and convenience accounts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision (c) of section 675 of the banking law is relettered subdivision (d) and a new subdivision (c) is added to read as follows:
(c) Upon the establishment and opening of a joint deposit of cash, securities, or other property as defined in subdivision (a) of this section, a banking organization, a foreign bank corporation transacting business in this state, a savings and loan association or a credit union transacting business in this state shall offer an account for convenience as defined by section six hundred seventy-eight of this article to the depositor.
§ 2. Section 678 of the banking law, as added by chapter 436 of the laws of 1990, subdivision 2 as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended to read as follows:
§ 678. Accounts for convenience only. 1. Upon the establishment and opening of a joint deposit of cash, securities, or other property as defined in subdivision (a) of section six hundred seventy-five of this article, a banking organization, a foreign bank corporation transacting business in this state, a savings and loan association or a credit union transacting business in this state shall offer an account for convenience as defined in this section.
2. When a deposit of cash, securities or other property has been made, or shares shall be issued in or with any banking organization or foreign banking corporation transacting business in this state, in an account established after the effective date of this section, in the name of a depositor and another person and in form to be paid or delivered to
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10825-02-7
S. 5810 2
either "for the convenience" of the depositor, the making of such deposit or the issuance of such shares shall not affect the title to such deposit or shares and the depositor shall not be considered to have made a gift of one-half the deposit or of any additions or accruals thereon to the other person, and, on the death of the depositor, the other person shall have no right of survivorship in the account. If an addition is made to such an account by anyone other than the depositor, such an addition and accruals thereon shall be considered to have been made by the depositor. Such deposit or shares, together with all additions and accruals thereon, may be paid or delivered to the depositor or the other person, and such payment or delivery and the receipt or acquittance of the one to whom such payment or delivery is made, shall be a valid and sufficient release and discharge to the banking organization or foreign banking corporation prior to the receipt by the banking organization or foreign banking corporation of notice in writing signed by the depositor not to pay or deliver such deposit or shares and the additions and accruals thereon in accordance with the terms thereof, and after receipt of any such notice, the banking organization or foreign banking corporation may require the receipt or acquittance of the depositor for any further payments or delivery. If the depositor is dead, such payment or delivery to the other person shall be a valid and sufficient release to the banking organization or foreign banking corporation prior to the receipt by the banking organization or foreign banking corporation of written notice of the depositor's death. A banking organization or foreign banking corporation which, upon the death of the depositor and prior to service upon it of a restraining order, injunction or other appropriate process from a court of competent jurisdiction prohibiting payment, makes payment to the executor, administrator or other qualified representative of the deceased depositor's estate, shall, to the extent of such payment, be released from liability to any person claiming a right to the funds and the receipt or acquittance of the executor, administrator or qualified representative to whom payment is made shall be a valid and sufficient release and discharge of the financial institution.
[2.] 3. The superintendent of financial services shall promulgate and may from time to time amend rules and regulations which require that a depositor who requests the establishment of an account in the name of the depositor and another person "for the convenience" of the depositor be informed of the terms and conditions of the account described in subdivision [one] two of this section, including the relationship and consequences between the parties in such an account, the difference between such an account and a joint account established under section six hundred seventy-five of this article, and the responsibilities of the institution with which such an account is established. This subdivision or any rule or regulation thereunder shall not be deemed or construed as increasing or diminishing the rights or liability of any person, or other entity.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the banking law, in relation to joint deposit and convenience accounts
Purpose
Relates to the establishment of joint deposit and convenience accounts
Summary of provisions
Section 1: Amends section 675 of the banking law to include a new subdivision requiring that specified banking institutions offer an account for convenience, including information regarding such accounts, when a joint account is established and opened.
Section 2: Amends section 678 of the banking law to require that specified banking institutions offer an account for convenience, including information regarding such accounts, when a joint account is established and opened. This information shall be developed and promulgated by the Superintendent of Financial Services, including guidance for banking institutions regarding information about the differences in relationships and legal consequences between joint accounts and convenience accounts.
Section 3: Effective date.
Justification
In February 2017, the New York State Senate and Assembly Aging Committees held a joint public hearing regarding the incidence and prevention of elder abuse in the State of New York. As part of its testimony at the hearing, the District Attorneys Association of the State of New York recommended modifications to the banking law to require that account holders be informed of the opportunity to open convenience accounts as opposed to joint accounts when managing their finances.
Joint accounts are commonly opened when an elderly individual is seeking assistance with paying bills or budgeting for daily living expenses. Unfortunately, these types of accounts pose several risks for elder abuse including financial exploitation. Pursuant to banking law section 675, joint accounts create a legal relationship between co-owners that includes the equal right to access funds in the account as well as the right of survivorship when one of the co-owners dies. As a result, vulnerable seniors are at increased risk of joint owners withdrawing money for their own use, exposing account funds to creditor claims, and undermining a senior's estate plan.
In contrast to joint accounts, convenience accounts allow the depositor to retain ownership rights, and establishes a fiduciary relationship that binds the other person named on the account to act in the best interests of the depositor. Due to this arrangement, criminal prosecution is more viable when there is misuse of a vulnerable elderly person's funds.
While access to these accounts is established in law, and has been advocated for by senior advocacy groups, the Consumer Protection Bureau and law enforcement, it has been reported that banking institutions do not publicize these types of accounts, and in some instances, do not offer them. This legislation will require that when a person applies for a joint account at a banking institution that they be offered the option to open a convenience account, and be provided with information that clarifies the legal relationships and consequences between the two. With this information, seniors will be provided with more resources to effectively manage their finances and safeguard themselves from any possible exploitation.
Legislative history
New bill.
Fiscal implications
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.