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Question:
Can an individual deposit a check payable to themselves as custodian for a minor, into their own personal account. Not into a custodial account.
Answer:
A financial institution should never knowingly allow a custodian or any fiduciary to deposit checks made payable either to the ward or the individual in the capacity of a custodian/fiduciary into the personal account of the custodian/ fiduciary.
The funds were made payable to the ward or to the custodian for the benefit of the ward. If the custodian is authorized to distrubute funds to him/herself by a custodial agreement or court order, the check should be drawn on the custodial account, made payable to the individual and signed by the individual as custodian, so there is a clear paper trail of the transaction.
The ward, if a minor, most likely will hold the bank liable for the transaction once he or she reaches the age of majority. If the ward is incapacitated, a subsequent custodian could also assert a claim that the distribution to the former custodian was unauthorized.
First published on BankersOnline.com 5/20/02
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